Becker's Hospital Review

21 CFO / FINANCE Major for-profit hospitals' labor costs hit $12B in Q1 By Ayla Ellison T hree of the four major for-profit hos- pital operators in the U.S. saw labor expenses spike in the first quarter of this year. HCA Healthcare, a 182-hospital system based in Nashville, Tenn., reported $6.94 billion in expenses tied to salaries and ben- efits in the first quarter of this year, a 10.1 percent year-over-year increase. "In the first quarter, we had a number of positive volume and revenue indicators," HCA CEO Sam Hazen said in an April 22 earnings release. "Unfortunately, they were offset by higher than expected inflationary pressure on labor costs." HCA ended the first quarter of this year with net income of $1.27 billion on reve- nue of $14.95 billion. In the same period of 2021, the company posted net income of $1.42 billion on revenue of $13.98 billion. Salaries, wages and benefits made up $1.69 billion of Universal Health Services' expens- es in the first quarter of this year, up from $1.5 billion in the same period a year earlier. "Our operating results during the first quar- ter of 2022 reflect continued uncertainties related to the COVID-19 pandemic as well cost escalations related to the nationwide shortage of nurses and other clinical staff and support personnel," UHS said in an April 25 earnings release. "As a result, our labor costs were higher than anticipated, and patient volumes at our behavioral healthcare facilities were lower than anticipated, which unfavorably impacted our operating results during the first quarter of 2022." King of Prussia, Pa.-based UHS ended the first quarter of this year with net income of $153.9 million on revenue of $3.29 billion. In the same period of 2021, UHS, which operates 28 acute care hospitals, posted net income of $209.1 million on revenue of $3.01 billion. Community Health Systems, an 83-hospital system based in Franklin, Tenn., report- ed expenses tied to salaries and benefits of $1.33 billion in the first quarter of this year, up from $1.3 billion in the same period a year earlier. Company leaders said they ex- pect the labor pressures to continue. "Moving through the second quarter and the remainder of the year, we anticipate contract labor rates to remain elevated, however, we expect our operational mo- mentum to continue, as we anticipate cap- turing deferred healthcare demand, ben- efitting from recent strategic investments, and continuing the execution of the com- pany's margin improvement program," Tim Hingtgen, CEO of CHS, said in an April 27 earnings release. CHS ended the first quarter of this year with a net loss of $1 million on $3.1 billion in revenue. e company reported a net loss of $64 million on revenue of $3 billion in the first quarter of 2021. Dallas-based Tenet Healthcare was the only major for-profit hospital operator to see labor expenses decline in the first quarter of this year. The company reported $2.18 billion in expenses tied to salaries, wages and benefits in the first quarter of 2022, down from $2.2 billion in the same period a year earlier. The company, which operates 60 acute care and specialty hospitals, ended the first quarter of this year with net income of $139 million on revenue of $4.75 billion. In the same period of 2021, Tenet reported net income of $97 million on revenue of $4.78 billion. n Mass General Brigham posts $867M quarterly net loss By Alia Paavola D espite seeing a slight increase in revenue, Boston-based Mass General Brigham ended the second quarter of fiscal year 2022 with both an operating loss and net loss, according to its financial report released May 13. Mass General Brigham recorded operating revenue of $4.04 billion in the quarter ended March 31, up from the $4.02 billion recorded in the same pe- riod one year prior. Mass General Brigham said patient service revenue in- creased by 4 percent over the same period last year, which reflects higher inpatient acuity. While the organization's revenue increased slightly, its expenses grew 12 percent to $4.23 billion in the second quarter of fiscal 2022. Mass General Brigham attributed the expense increase to the use of temporary staffing, wage adjustments to facilitate workforce retention, supply cost increases and retirement benefit costs. For the second quarter of fiscal 2022, Mass General Brigham posted an oper- ating loss of $193.18 million. In the same period one year prior, Mass General Brigham recorded an operating gain of $250.15 million. After factoring in nonoperating items, including an $853.04 million invest- ment loss, Mass General Brigham ended the period with a net loss of $866.59 million. In the comparable 2021 quarter, Mass General recorded a net income of $955.87 million. "As Mass General Brigham emerges from many of the severe challenges posed by the COVID-19 pandemic, the system continues to navigate the na- tionwide labor shortage and a capacity crisis throughout its hospitals while facing mounting inflationary pressures," Mass General Brigham said in the financial report. "These challenges have profoundly affected patients, provid- ers, staff, and system operations, yet Mass General Brigham is progressing with its strategy to build an efficient and integrated care model that allows pa- tients to receive the right care in the right place, throughout their lifetimes." n

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