Providence reports $1.7 billion operating deficit in 2022
Higher expenses were driven by labor and pharmaceutical costs.
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Providence St. Joseph Health reported a $1.7 billion deficit of revenues over expenses from operations for 2022.
The large Catholic health system, with headquarters in Renton, Washington, and Irvine, California, said operating losses were impacted by economic pressures from inflation, workforce expenses and elevated lengths of stay due to lack of patient access to post-acute care and COVID-19 surges in 2022.
Coronavirus Aid, Relief, and Economic Security Act funding for the fiscal year ending December 31, 2022, was $120 million, compared to $313 million in 2021. Operating expenses increased 6% from 2021 to 2022, and recorded an 8% increase in salaries and benefits.
Expenses were driven by higher labor, pharmaceutical and restructuring costs. The system recorded $247 million in restructuring costs related to asset rationalization, employee reductions and other items, it said.
Providence continues to focus on recovery and renewal, such as efforts to address pent-up demand for surgical procedures and chronic care, it said.
It is working with the payer community on reimbursement and in growing its health plan beyond Oregon, including leveraging Medicare Advantage.
WHY THIS MATTERS
The financial reports of numerous health systems show similar strain from labor and pharmaceutical costs. The Cleveland Clinic reported a net loss of $1.5 billion in the first three quarters of 2022.
Kaiser Permanente reported an operating loss of $1.3 billion for 2022, compared to operating income of $611 million in 2021. The financial results reflect an increase in healthcare expenses driven by inflation, high COVID-19 costs, ongoing labor shortages and a rise in care volume, Kaiser said.
Mass General Brigham reported a loss from operations of $1 million for the first quarter of Fiscal Year 2023, which ended on December 31, 2022.
THE LARGER TREND
Contract labor expenses for hospitals shot up 258% from 2019 to 2022, which is linked to long-standing labor shortages in the industry, according to data published by Syntellis and the American Hospital Association.
A Kaufman Hall report said hospitals entered 2023 on more stable footing, following the worst financial year since the start of the COVID-19 pandemic. However, they still face a range of persistent challenges, including higher labor expenses, lower patient volumes and a fundamental shift in where patients access care services, according to the Flash Report.
Twitter: @SusanJMorse
Email the writer: SMorse@himss.org
Florence Hudson will offer more detail during her HIMSS23 session "Update on Standard for Clinical Internet of Things." It is scheduled for Tuesday, April 18, at 10:30 a.m. - 11:30 a.m. CT at the South Building, Level 4, in room S406 B.
