CommonSpirit Health reported a $1.85 billion net loss for fiscal 2022 and closed out the year with a -3.8% operating margin, the Catholic not-for-profit health system disclosed Thursday.
The Chicago-based company’s performance during the fiscal year that ended June 30 compares to a $5.19 billion net gain during the prior 12-month period. Operating expenses were up 9% to $35.2 billion and revenue rose 2% to $33.9 billion. CommonSpirit cited elevated labor costs, higher prices due to inflation, lower patient volumes and reimbursements that didn’t keep pace with expenses as challenges.
The end of federal COVID-19 relief was another factor. CommonSpirit received $1.6 billion in CARES Act grants as of June 30, most of which were awarded in 2020 and 2021.
CommonSpirit’s fiscal 2022 performance may wind up looking better depending on an upcoming federal decision. California is awaiting Centers for Medicare and Medicaid Services approval of a policy designed to support hospitals that treat Medicaid enrollees and uninsured patients. If federal authorities renew the program, which expired in last year, eligible California providers would receive retroactive supplemental reimbursements. For CommonSpirit, that would translate to an estimated $260 million in additional net income for the first half of fiscal 2022, according to the company.
“This continues to be a very challenging time for health systems, especially nonprofit health systems like CommonSpirit where a majority of patients are Medicare and Medicaid beneficiaries,” Chief Financial Officer Dan Morissette said in a news release. “As an integrated organization with a broad footprint, we’ve been able to take many steps to reduce costs and grow revenue. But it’s clear we need to do more to improve performance.”
CommonSpirit Health executives were not available for interviews.
In August, Wright Lassiter III, formerly of Detroit-based Henry Ford Health, took over as CommonSpirit CEO, succeeding Lloyd Dean, who announced his retirement a year ago.
Earlier this month, CommonSpirit ended a 25-year joint operation with Livonia, Michigan-based Trinity Health when Trinity completed its acquisition of MercyOne, a health system based in Clive, Iowa.
Most health systems are seeing big losses this year. St. Louis-based Ascension reported a $1.84 billion net loss for its latest fiscal year. Ohio-based Cleveland Clinic posted a $1.07 billion net loss during the first half of the year. Providence of Renton, Washington, posted losses nearing $2 billion for the first six months.