Becker's Hospital Review

19 CEO / STRATEGY CommonSpirit adjusts portfolio, investing in 'strongest markets,' CEO says By Alan Condon C hicago-based CommonSpirit has made "solid progress" on its financial improvement strategy in the most recent quarter but is "certainly not where we need to be," CEO Wright Lassiter III said during the health system's fiscal second quarter investor call on Feb. 29. e 162-hospital system has taken various steps to strengthen its financial performance in recent quarters aer reporting almost $1.4 billion in operating losses in fiscal year 2023, which ended June 30. "We've adjusted our portfolio through growth and ambulatory services, we've invested and grown in our strongest markets — including Arizona, Washington Colorado and Utah — and we've divested of other geographies that were better served as part of other systems," Mr. Lassiter said. CommonSpirit recently completed the acquisition of five Utah hospitals from Dallas-based Steward Health Care in May. In April, Dignity Health, part of CommonSpirit, signed a $100 million definitive agreement to sell two of its San Francisco-based hospitals to UCSF Health. Another transaction saw Centennial, Colo.-based Centura Health fold into CommonSpirit, which now manages 20 hospitals and more than 240 sites of care in Colorado, Kansas and Utah that were previously managed by Centura. e Centura Health brand will transition to CommonSpirit and be retired in the coming months. CommonSpirit also consolidated from eight divisions to five regions — California, Central, South, Mountain and Northwest — and installed a consistent leadership structure within each region. "is further reduces complexity, increases efficiency and reduces administrative overhead," Mr. Lassiter said. "We've defined 34 healthcare markets managed by 24 market leaders, placing a strong emphasis on market-based approaches versus facility-based approaches to succeed and improve our care networks and essentiality. We're focusing on each of our markets in that way." e reorganization was also designed to align and create clarity of roles across CommonSpirit's national offices, regions, markets and care offerings. "Work like this involves discomfort and significant change management, and we feel comfortable we've put in place adequate support so that these changes will yield success for our organization," Mr. Lassiter said. Ultimately, CommonSpirit aims to better leverage its "systemness" and its economies of scale nationally, but to execute locally, with the shi away from facility-based teams to market-based teams. "Overall our portfolio is well diversified across 24 states and care verticals, [but] there is an opportunity for us to invest even further and more intentionally, and in some places consider divesting to strengthen our organization," he said. "is includes a focused growth path in ambulatory care verticals — such as ambulatory surgery centers, behavioral care and care in the home — and a shi in how we allocate growth and maintenance capital consistent with our evolving market-based strategic approach." CommonSpirit is focusing on fully utilizing its existing care networks and said it has developed tools that will help its providers and patients better navigate these networks to improve continuity of care. "A more seamless referral network for our patients can also boost organic growth, and we're focusing in both of those areas," Mr. Lassiter said. n UHS CEO eyes return to 'pre-COVID trends' in 2024 By Alan Condon K ing of Prussia, Pa.-based Universal Health Services projects net revenues to hit up to $15.7 billion in 2024, which would represent year-year-year growth of up to 10%, executives said during the company's Feb. 28 earnings call. The for-profit health system recorded an operating income of $1.2 billion (8.2% margin) in 2023 — up from a $1 billion gain (7.5% margin) in 2022 — and could potentially return to double- digit revenue growth this year. "The core operating assumptions underlying our 2024 operating results forecast … largely reflect the historical pre-COVID trends in the respective businesses," Marc Miller, president and CEO, said. "We anticipate that volumes in our acute segment will moderate from the elevated 2023 levels, but conversely, acuity and pricing in our acute business will increase, and for the full year, both metrics will resemble the patterns we experienced before the pandemic." UHS said it expects operating results to return to pre-pandemic levels despite healthcare's shift from inpatient to outpatient settings and pressure from payers to restrain reimbursement increases in various ways. "We expect continued improvement in premium pay labor trends and general cost trends that will remain largely stable in 2024," Mr. Miller said. "Specifically, physician expenses, which were a major headwind in 2023, are expected to grow by the overall inflation rate in 2024." UHS operates 27 acute care hospitals, which continued to see strong demand for services in the fourth quarter. Adjusted admissions increased 5.6% while overall surgical volumes were up 4% year over year. The health system's behavioral business — which comprises more than 333 inpatient behavioral health facilities — remains robust with same-store adjusted patient day growth in 2024 projected to surpass the 2.1% growth reported in 2023. "A significant driver of behavioral volume upside is due to our success in filling vacant positions," Mr. Miller said. "But we acknowledge that specialty workforce shortages in certain markets continue to be an obstacle to even more volume growth." n

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