Trinity Health notched a $148.5 million operating loss (-0.7% operating margin) and an overall deficit of $1.4 billion for the fiscal year ended June 30, according to financial documents released late Friday.
The 88-hospital Catholic health system’s losses follow 2021’s $845.8 million operating gain (4.2% operating margin) and $3.9 billion revenue excess.
Still, the organization lauded its “proactive response to healthcare pandemic aftershocks [that] significantly mitigated operating losses and strengthens the system for strategic growth.”
These “targeted efforts” helped Trinity reduce its June contract labor costs by 60% from March’s peak and prevent elective surgery suspensions due to capacity issues, supply shortages and other roadblocks, the system wrote.
Operating revenue grew 1.3% year over year to $19.8 billion; however, the Michigan-based system actually saw its total operating revenue fall by about $230 million when also including Provider Relief Fund grants totaling $140.5 million in 2022 and $618.8 million in 2021.
Trinity attributed the weak revenue growth to fluctuating patient volumes “yet to return to pre-pandemic levels” and temporary voluntary curbing of elective surgeries due to staffing shortages during the winter’s COVID-19 surge. Of note, emergency visits increased by 7.6% while surgeries and inpatient discharges fell 3.4% and 1.2%, respectively, after adjustment.
Total operating expenses rose 4% year over year to $20.1 billion and were headlined by an 8.2% increase in labor costs.
Trinity said it spent an additional $519 million (6.2% increase) on salaries and wages, $345.4 million (123%) more on contract labor and $55.1 million (1.6%) on its supplies. The system said those increases were “partially offset” by reduced spending on insurance, purchased services, depreciation and amortization and interest.
Adding to the operating deficit was $1.2 billion in nonoperating losses, largely comprised of $1 billion in investment losses and $150.2 million in equity losses of unconsolidated affiliates. The system had brought in $3.3 billion in nonoperating income in 2021 thanks to $2.3 billion of investment earnings and $912.9 million of equity in earnings of unconsolidated affiliates.
As of June 30, Trinity reported total assets of $31.1 billion compared to the prior year’s $33.6 billion, with much of the difference coming from a $1.7 billion decrease in unrestricted cash and investments. The system said its days of cash on hand declined from 254 days to 211 days.
“Trinity Health’s balance sheet and liquidity metrics remain strong despite stressors from the ongoing pandemic and investment market volatility,” the system wrote.
Trinity’s year included the divestiture of its 50% interest in Gateway Health Plan and an announcement that Trinity would acquire CommonSpirit Health’s 50% stake in Mercy Health Network.
The latter deal closed Sept. 1 and, according to the filing, came at the cost of a $613 million cash payment to CommonSpirit.
The system sees 3.3 million patients per year and generates more than $3 billion in combined annual revenue, although Trinity said it is still working to determine the fair value of its new assets and liabilities.
Trinity’s fiscal 2022 losses are not unique among its nonprofit Catholic peers. CommonSpirit just recently reported its own $1.9 billion net loss and a -3.8% operating margin while Ascension Health logged a $1.8 billion loss and a -3.1% margin.