Becker's Hospital Review

22 CFO / FINANCE CommonSpirit posts operating loss, inks $135M deal for 2 hospitals By Ayla Ellison C ommonSpirit Health, a 140-hospital system based in Chicago, reported an operating loss for the three months ended Dec. 31 as higher labor and supply costs offset revenue gains, according to finan- cial documents released Feb. 15. CommonSpirit, formed through the 2019 merger of San Francisco-based Dignity Health and Englewood, Colo.-based Cath- olic Health Initiatives, saw revenues rise 7.2 percent year over year to $8.9 billion in the second quarter of fiscal year 2022, which end- ed Dec. 31. e increase was attributed to re- bounding patient volume. On a same-facility basis, adjusted admissions, outpatient visits and emergency department visits were up year over year. e nonprofit system's revenue gains were offset by higher expenses tied to labor and supply costs. Supply costs rose 11.6 percent year over year, and labor expenses per adjust- ed admission were up 12.3 percent as a result of higher than normal contract labor costs, increased incentive and overtime pay and a high number of staff who were out sick, Com- monSpirit said. CommonSpirit is launching programs to ad- dress staffing shortages, including a systemwide nursing residency program. It is also expanding its internal nurse staffing agency and leveraging relationships with academic partners. "is quarter demonstrated how important it is that we are proactive and strategic about managing the impacts of the COVID-19 pan- demic," CommonSpirit CFO Dan Morissette said in a Feb. 15 earnings release. "While pa- tients continued to return to our care sites, labor and supply costs also rose significantly. Our priority now must be meeting the in- creased demand for care and doing all we can to support our employees, while also focusing on efficiencies as we continue to see ebbs and flows from the pandemic." CommonSpirit recorded an operating loss of $81 million in the three-month period end- ed Dec. 31, compared to operating income of $363 million in the same period a year earlier. CommonSpirit closed out the second quarter of fiscal year 2022 with excess revenues over expenses of $118 million. In the same period of 2020, the health system reported net in- come of $1.9 billion. e health system entered into a definitive agreement in early February to acquire two hospitals — one in Kansas and one in Colora- do — from Brentwood, Tenn.-based LifePoint Health. CommonSpirit disclosed in its earn- ings report that it is paying $135 million for the two facilities. Under the deal, which is scheduled to be completed by the end of the fiscal year, the hospitals will be managed by Centennial, Colo.-based Centura Health. CommonSpirit disclosed last year that a group of hospitals in North Dakota and Min- nesota were being held for sale and that it was in discussions to negotiate an affiliation agreement to transfer ownership of the hos- pitals. e health system said Feb. 15 that the hospitals no longer meet the requirements as held for sale. n Providence prioritizing workforce, adjusting to post- pandemic baseline, CFO says By Marissa Plescia G reg Hoffman, CFO of Renton, Wash.-based Provi- dence, discussed the current challenges the system is facing amid the pandemic, as well as financial changes he anticipates in the short and long term on an episode of "Becker's Healthcare Podcast." Here is an excerpt from the podcast, lightly edited for length and clarity. Question: What are your top one or two priorities that are consuming most of your time today? Greg Hoffman: No. 1 is workforce. It's not only the chal- lenges of the current shortages as we navigate yet another surge and wave in the pandemic — but most importantly, it's just ensuring we're taking care of the well-being of our caregivers. I mean, that's top of mind for us. It is a very stressful time. There's a lot of burnout. No. 2 is really understanding, what is the post-COVID baseline going to be? I think many positive things were accelerated across COVID. Think of things like telehealth, hospital-at-home, the shift from inpatient to outpatient. The potential of other things were highlighted: the use of data and analytics across the pandemic, value-based-care. These are all positive trends, I think, for the industry that are quickly coming ahead, and we're going to continue to see significant transformation and innovation ahead. But we're also now seeing significant inflation. So our [third] priority is really charting our path forward across the next several years. n

• Cover