Becker's Hospital Review

20 CFO / FINANCE Tower Health to cut pay for executives, managers By Kelly Gooch T ower Health said it is cutting salaries of executives and managers amid financial losses linked to the COVID-19 pandemic. e West Reading, Pa.-based health system has struggled financially in the last two fiscal years. It recorded an operating loss of $378.2 million in fiscal year 2020, as well as an oper- ating deficit of $178.8 million the year prior. And last November, the health system said it would consider selling six of its Philadel- phia-area hospitals, including those it has pur- chased since 2017 from Franklin, Tenn.-based Community Health Systems, as part of a finan- cial turnaround plan. To help offset the financial damage, about 400 Tower Health executives and managers had their pay cut beginning in their Feb. 19 pay- checks, according to e Philadelphia Inquir- er, which cites a letter CEO Clint Matthews wrote to staff. Executives had their pay cut by 15 percent, and directors, senior directors and associate vice presidents had their pay cut by 10 percent. In a statement shared with Becker's on Feb. 8, the health system said it "is undertaking sev- eral initiatives as part of a coordinated plan to improve operations, strengthen care delivery and address the ongoing financial impact of COVID-19." "ese actions include compensation reduc- tions for executives and managerial employees, along with operational improvements to reduce costs and enhance revenue," according to the Tower Health statement. e salary cuts will be in effect until June 30, and do not affect front-line clinical or support staff, who received merit increases in January. Tower Health projects cost savings of about $11.6 million because of the pay cuts. "Reducing management compensation is a difficult but necessary decision that will stabi- lize and strengthen our financial performance as we continue to meet the challenges of the COVID-19 pandemic, as well as our ongoing mission of providing compassionate, accessible, high-quality, cost-effective healthcare to our communities," the health system said. n UVA Health in talks to acquire full ownership of 3 hospitals By Alia Paavola C harlottesville, Va.-based UVA Health signed a letter of intent to acquire full ownership of Novant Health UVA Health System, a three-hospital system based in Northern Virginia. Currently, the health system is jointly owned by Winston-Salem, N.C.-based Novant Health and UVA Health. Novant has a 60 percent ownership stake, and UVA has a 40 percent stake. Under the proposed deal, UVA Health would acquire Novant's 60 percent stake and have full ownership of all hospitals and outpatient services. The three hospitals are Novant Health UVA Health System Culpeper (Va.) Medi- cal Center, Novant Health UVA Health System Haymarket (Va.) Medical Cen- ter and Novant Health UVA Health System Prince William Medical Center in Manassas, Va. "Together, Novant Health and UVA Health have determined that having a sin- gle owner is the best way to provide exceptional care in the communities that the system serves," said Carl Armato, Novant Health's president and CEO. The organizations hope to finalize the transaction by July 1. n HCA annual profit climbs to $3.8B By Ayla Ellison H CA Healthcare, a 185-hospital system based in Nashville, Tenn., said its revenue and profit increased in the fourth quarter of 2020. The for-profit hospital operator posted revenue of $14.3 billion in the fourth quarter of last year, up 5.7 percent from the same period a year earlier, when revenue totaled $13.5 billion. HCA said same-hospital admissions declined 3.4 percent year over year. Same-facility emergency room visits were down 21 percent, while inpatient surgeries and outpatient surgeries each declined more than 5 percent. "Same facility revenue per equivalent admission increased 14.1 percent in the fourth quarter of 2020, compared to the fourth quarter of 2019, due to increases in acuity of patients treated and favorable payer mix in the current quarter," HCA said. After factoring in operating expenses and nonoperating items, the company ended the fourth quarter of last year with net income of $1.4 billion. That's up from net income of nearly $1.1 billion in the same period a year earlier. Looking at full-year 2020 results, HCA reported net income of $3.8 billion on revenue of $51.5 billion. The company posted net income of $3.5 billion on revenue of $51.3 billion in 2019. "In the face of the highest surge yet of the COVID-19 pandemic, we fin- ished the year with strong financial results in the fourth quarter. These re- sults were driven, once again, by highly acute inpatient volumes coupled with solid cost management," HCA CEO Sam Hazen said in an earnings release. "We are incredibly proud of our colleagues and our accomplish- ments in 2020, which included returning over $6 billion of CARES Act funds to the federal government. Our performance this past year gives us confi- dence to believe that we will be able to navigate successfully through future challenges as well." n

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