Sutter Health kicked off the year’s first quarter with higher year-over-year operating revenues and operating income, but ultimately recorded a $184 million loss for the period thanks to a troubled investment market, according to financial statements for the three months ended March 31.
The Sacramento-based nonprofit increased its first-quarter total operating revenues 3.7% year over year ($126 million) to nearly $3.6 billion.
These revenues included a 2.7% year-over-year increase in patient service revenues and an 840% year-over-year increase in contributions that was largely attributed to COVID-19 federal grants (Sutter received $88 million in CARES Act relief during the quarter, $87 million of which was logged as contributions).
Of note, Sutter did not record or report any hospital fee program revenue for the first quarter as California has not yet approved the hospital fee program covering the period from January 1, 2022 to December 31, 2022.
Alongside the higher revenues, Sutter saw a 0.5% year-over-year decrease in its total operating expenses during the first quarter.
The system cut its salaries and employee benefits down 3.1% ($52 million) over the prior year’s period thanks to “a reduction of employees and additional pension-related cost in 2021,” but also saw a 14.2% ($125 million) increase in its purchased services “primarily due to professional fees expense,” according to the filing.
Much of the reported expense reduction came from a 45% ($114 million) year-over-year decrease in Sutter’s “other” expenses—again with a significant asterisk as all hospital fee program expenses for the quarter have yet to be recorded, the system wrote.
Taken together, Sutter logged $95 million in income during the first three months of 2022, a turnaround from the $49 million loss of the previous year. Non-investment earnings before interest, expense, taxes, depreciation and amortization (EBITDA) improved from $169 million in Q1 2021 to $307 million to Q1 2022.
Incorporating an “unfavorable market” and other non-operating factors, however, drags the system to a loss for the quarter.
Investment income in the beginning of 2022 was $56 million, down from $150 million during the same period in 2021. Sutter also reported a $161 million change in net unrealized gains and losses on investments, an area it had logged a $76 million gain the prior year. Further, Sutter took a $208 million loss on the deconsolidation of affiliates.
As a result, Sutter reported a loss of $184 million attributable to the system for the year’s first three months. It had seen a gain of $189 million attributable to Sutter Health during the same period last year.
Through the entirety of 2021, Sutter Health logged $14.2 billion in total operating revenues across its 23 hospitals and dozens of other care locations. With just over $14 billion in total operating expenses and over a billion from its investments and other income, the nonprofit saw over $1.1 billion of income attributable to Sutter Health during the most recent fiscal year.
As of March 31, Sutter’s balance sheet sat at $437 million in accrued expenses related to the Centers for Medicare and Medicaid Services’ Accelerated and Advance Payments Program. The system had received $999 million through the program back in 2022 and had $592 left to pay as of the end of 2021.