Nonprofit hospital operator Ascension Healthcare reported a loss from operations of $1.8 billion on revenue of $21.3 billion for the nine months ending March 31, as it struggled with higher operating costs and sustained revenue challenges driven by continued impacts of the COVID-19 pandemic and inflationary pressures.
An improvement in total surgical volumes, especially outpatient surgeries and emergency room visits, didn’t outpace growing expenses for Ascension, which increased by $804 million year over year in the nine month period.
Ascension’s loss comes as nonprofit and for-profit hospital operators across the country grapple with persistent heightened expenses. CommonSpirit earlier this month reported growing expenses and announced that it had cut jobs. The Mayo Clinic this month also reported that its expenses has grown 9%. Cleveland Clinic reported a profit in the first quarter this year despite rising expenses and Providence also reported increased expenses.
“As has been widely reported, hospitals nationwide are experiencing intense financial and operational pressures as a result of the after effects of the COVID-19 pandemic, continued healthcare worker staffing shortages, ongoing supply chain challenges and persistent inflation. Ascension is no exception to these trends,” said Liz Foshage, executive vice president and CFO of Ascension, in a statement on the results.
The system attributed its expense growth to inflationary pressures “consistent with the overall healthcare provider industry.” Ascension said it had implemented plans focused on controlling expenses and improving efficiency, but acknowledged that its actions have “not fully offset” inflationary pressures.
Both supply and salary and benefit expenses decreased for the operator as Ascension relied less on contract labor. However, the system reported a 15% increase in other areas like purchased services, driven by its transition to outsourced laboratory services.
Although expenses are rising, volumes for the operator increased 2.3% for the nine month period compared with the prior-year period. For the three months ended March 31, volumes also increased by 5.3% compared to the prior-year period.
The lessening of the COVID pandemic also impacted Ascension’s urgent care volumes, which decreased by 32.9% compared to the prior-year period, as patients experienced less severe COVID infections.
Ascension’s investment losses improved after the industry struggled with losses driven by volatile financial markets last year. The operator reported investment losses of $98 million for the nine month period, compared to a prior-year loss of $736 million.