Becker's Hospital Review

14 CFO / FINANCE CommonSpirit posts $1.7B net income in Q3 By Alia Paavola A er posting a $1.4 billion net loss in the third quarter of fiscal year 2020, CommonSpirit, a 140-hospital sys- tem based in Chicago, saw improved financ- es in the third quarter of fiscal year 2021, according to financial documents released May 14. CommonSpirit, formed in 2019 through the merger of San Francisco-based Dignity Health and Englewood, Colo.-based Cath- olic Health Initiatives, reported revenues of $8.8 billion in the third quarter of fis- cal 2021, up from $7.8 billion recorded in the same quarter one year prior. e health system said the third quarter of fiscal 2021 was the first period to fully include results from Virginia Mason Fransican Health, an 11-hospital system that was formed in Janu- ary and joined the CommonSpirit network. e health system's operating expenses also increased year over year. It reported total ex- penses of $8.3 billion in the third quarter of fiscal 2021, compared to about $8 billion re- corded in the same period last year. CommonSpirit ended the third quarter of fis- cal 2021 with operating income of $539 mil- lion, a figure that included federal relief funds and a pre-tax gain on the sale of joint-venture shares. CommonSpirit said without the aid and pre-tax gain, the health system would have posted an operating loss of $117 million in the quarter ended March 31, "highlight- ing the continuing concerns around overall patient volumes and the ongoing impact of the pandemic." Aer factoring in $1.2 billion in non-oper- ating income, including $636 million in in- vestment income, CommonSpirit posted a net income of $1.7 billion in the quarter end- ed March 31. In the same quarter one year prior, CommonSpirit recorded a net loss of $1.5 billion. "In many ways this quarter was similar to what we experienced over the last year, with a very challenging period followed by a ro- bust recovery," said CommonSpirit CFO Dan Morissette in a May 14 news release. "With vaccination rates rising and many people re- turning to their pre-pandemic routines, we expect to continue a strong path to recovery, while also recognizing that we will likely see operational impacts from the pandemic for quite some time." CommonSpirit said it also is working to strengthen its financial foundation by realiz- ing operational synergies this year. e goal is to realize $350 million to $400 million in savings during fiscal 2021, and it is on track to meet or surpass that goal. n CommonSpirit's plan to sell 14 hospitals to Essentia abandoned By Alia Paavola D uluth, Minn.-based Essentia Health and Chicago-based Com- monSpirit Health abandoned a deal that would have added 14 hospitals and three clinics to Essentia Health's network. The two organizations announced the end of negotiations May 18. CommonSpirit and Essentia signed a letter of intent in January to ex- plore the sale. "While we share a similar mission, vision, values and strong commit- ment to sustainable rural healthcare, CommonSpirit and Essentia were unable to come to an agreement that would serve the best inter- ests of both organizations, the people we employ and the patients we serve," according to a joint statement from the health systems. Under the letter of intent announced in January, CommonSpir- it-owned facilities operating under the CHI Health brand in North Da- kota and Minnesota would have joined Essentia Health. The deal in- cluded a full-service tertiary hospital in Bismarck, N.D., and 13 critical access hospitals, as well as associated clinics and living communities. "CommonSpirit and Essentia will continue to offer outstanding care in North Dakota and Minnesota. We've strengthened our relationship throughout this process and remain committed to possibilities in the future," the joint statement said. The abandonment news comes about two weeks after more than 700 nurses and healthcare workers filed a petition expressing concern over the deal. The Minnesota Nurses Association, healthcare workers at Essentia, and CHI Health said they are worried that the acquisition would result in layoffs and less access to patient care. n HCA to sell 4 Georgia hospitals for $950M By Alia Paavola H CA Healthcare will divest four of its hospitals in Georgia for about $950 million, the Nashville, Tenn.-based hos- pital system said May 3. The for-profit provider will sell the four facilities to Piedmont Healthcare, a nonprofit health sys- tem based in Atlanta. The four hospitals are the 310-bed Eastside Medical Center in Snellville; the 119-bed Car- tersville Medical Center; and the two-hospital Coliseum Health System, which includes 310- bed Coliseum Medical Centers in Macon and 103-bed Coliseum Northside in Macon. Pied- mont will also assume ownership of a behav- ioral health facility owned by the Coliseum Health System. HCA said the transaction will provide strategic value as it increases its financial flexibility to in- vest in its core markets. The two health systems expect the transac- tion to close in the third quarter of 2021. It still needs regulatory approvals. n

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