Becker's Hospital Review

12 CFO / FINANCE Antitrust settlement pushes Sutter Health to $613M operating loss By Ayla Ellison S acramento, Calif.-based Sutter Health re- ported a year-over-year increase in reve- nues in the third quarter of 2019, but the system ended the period with an operating loss, according to unaudited financial documents. Sutter's operating revenues totaled $3.25 billion in the third quarter of 2019, up nearly 2 percent from the same period of 2018. e boost was largely at- tributable to higher patient service revenues and premium revenues. Aer factoring in operating expenses and other costs, including a $575 million antitrust settle- ment, Sutter ended the third quarter of 2019 with an operating loss of $613 million. In the third quarter of 2018, the health system posted operat- ing income of $49 million. e $575 million settlement resolved allegations that Sutter violated California's antitrust laws by using its market power to overcharge patients and employer-funded health plans. e health system is expected to pay the settlement in June 2020, but it accounted for the expense in the third quarter of 2019. e settlement must be approved by the court. A hearing on preliminary approval of the settlement is scheduled for Feb. 25, 2020, and final approval is expected in June. "ere can be no assurance that the court will approve the settlement or that the resolution of these matters, including certain injunctive relief, will not have a material adverse effect on Sutter's consolidated financial position or results of oper- ations," read the health system's earnings release. Looking at the first nine months of 2019, Sutter's operating revenues increased 4 percent, and its operating loss totaled $539 million. In the first nine months of 2018, Sutter reported operating income of $149 million. n New York hospital closes campus By Ayla Ellison E astern Niagara Health System made several changes at the end of 2019 to improve its financial position and ensure long-term viability. In August, ENHS announced plans to close its campus in Newfane, N.Y. The system scaled back services at the hospital campus, previously known as Newfane Inter-Community Memorial Hospital, before shutting it down, according to Buffalo Business First. The Newfane campus closed Nov. 29, 2019, according to a Worker Adjustment Retraining Act Notification notice. The system's campus in Lockport, N.Y., remained open while working its way through the bankruptcy process. The hospital entered Chapter 11 bankrupt- cy in early last November. Eastern Niagara Hospital CEO Anne McCaffrey said legacy debt obligations pushed the hospital into bankruptcy. "The hospital has always met payroll, but it cannot overcome a number of the financial burdens that were incurred over the past ten years," she told Buffalo Business First."Through much analysis over the past year, it has been determined that ENH cannot get to break even with service line closures alone; therefore, Chapter 11 reorganization is necessary." n CHS absorbs $47M of patient debts in settlement By Ayla Ellison F ranklin Tenn.-based Community Health Systems will pay $22 mil- lion and absorb $47.5 million of patient debts to settle a lawsuit filed in 2017 by Spokane, Wash.-based Empire Health Foundation, according to The Spokesman-Review. Empire Health Foundation, a nonprofit entity, alleged CHS failed to provide obligatory levels of charity care at two Washington hospitals it acquired from Empire Health Services in 2008. The two hospitals — Dea- coness Hospital in Spokane and Valley Hospital in Spokane Valley — are now owned by Tacoma, Wash.-based MultiCare Health System. Empire Health Foundation alleged that when CHS acquired Deacon- ess Hospital and Valley Hospital it agreed to provide charity care at levels at least equal to the average provided by hospitals in Eastern Washington. The foundation claimed CHS' charity care spending fell below the levels promised and that CHS inflated the value of the char- ity care it did provide. Though CHS continues to deny the allegations, the company reached a settlement with Empire in October. CHS agreed to forgive up to $50 million in debt for patients who received care at the two Washington hospitals between Nov. 1, 2008, and June 30, 2017. CHS identified roughly 17,000 former patients who are eligible for debt relief, and a total of $47.5 million in debt is being forgiven, a CHS spokesperson told The Spokesman-Review. In addition to absorbing the patient debt, CHS agreed to pay $20 mil- lion to Empire's political lobbying arm and pay $2 million for Empire's legal expenses, according to the report. n

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