CommonSpirit Health Announces FY20 Financial Results

Chicago, Ill.— October 2, 2020—CommonSpirit Health today released financial results for the fiscal year ended June 30, 2020. CommonSpirit saw strong momentum in financial and operational performance through February, with performance well above last year’s level and trending toward positive operating income, before the focus shifted to a systemwide response to the COVID-19 pandemic.

Despite the impacts of the pandemic, CommonSpirit had a modest increase in operating revenue and earnings before interest, taxes, depreciation and amortization (EBITDA) compared to the prior year. The organization had an overall operating loss of $550 million, which was largely attributed to reduced volumes and increased costs during the peak of the pandemic.

CommonSpirit’s integrated operating model meant it was well-positioned to support its patients, communities and employees impacted by the health crisis. In March and April CommonSpirit was able to quickly expand capacity in hot spots, scale access to virtual care, centrally coordinate the distribution of supplies and personal protective equipment (PPE), support its employees and manage costs. The organization is now focused on recovery and succeeding in a drastically altered health care landscape that is presenting both significant challenges and new opportunities for health systems.

Revenues and EBITDA rose to $29.58 billion and $1.44 billion, respectively, including $826 million in CARES Act grants that were recognized as revenues during the fiscal year across CommonSpirit’s 137 hospitals. Federal aid was essential in stabilizing CommonSpirit’s financial situation during the pandemic’s peak, with CARES Act grants covering about 60% of pandemic-related losses.

Adjusted admissions were down 6.2% compared to the prior year, with volumes falling as much as 40% at many care sites in April when scheduled procedures were cancelled. The system saw performance improve significantly in June, July and August, and patient volumes are now only about 8% below pre-pandemic levels across all care settings.

“Our mission has driven our response to this pandemic and our path to recovery every step of the way,” said CommonSpirit CEO Lloyd H. Dean. “This year has been challenging, but also deeply inspiring as we saw the resolve and courage from our health care workers and our patients. This experience has only strengthened our organization as we seize the chance to rethink how we can best deliver care and thrive long after this health crisis has passed.”

CommonSpirit made significant progress in moving past its integration stage and focusing on enterprise performance. The company implemented a new, unified dashboard to track operational, financial and clinical progress across its 13 operating divisions, 137 hospitals and more than 1,000 clinics and other care sites. CommonSpirit had also achieved about $350 million in cost savings through February, on track for its ambitious goal of $2 billion over four years.

On July 1, Dean assumed responsibilities as sole CEO following the retirement of Kevin E. Lofton.

“As a nonprofit, faith-based provider of essential care, our first priority is responding to the health needs of our communities. At the same time we have taken a responsible and disciplined approach to managing our operations and finances during this crisis,” said CommonSpirit senior executive vice president and CFO Daniel Morissette. “While we know it will take some time for our performance to fully recover, we are well-positioned to build on the significant progress we saw before the pandemic hit.”

Prioritizing Pandemic Response

Beginning in March, CommonSpirit took a series of actions to centrally coordinate a response to the pandemic across its diverse network for care locations, including:

• Creating a centralized dashboard to monitor positive cases, testing, staffing needs and supplies across the entire organization;
• Managing the supply chain to optimize the movement of PPE, ventilators, and supplies across the care network;
• Establishing standardized clinical guidelines and practices across the system;
• Rapidly expanding capacity in hot spots, including standing up surge units and even entire hospitals to meet the demand for care;
• Coordinating staffing needs across the care network;
• Expanding testing capabilities with the creation of a national, high-capacity testing laboratory that can process 10,000 tests per day with a 24-36 hour turnaround time;
• Rapidly scaling virtual care capabilities across its large physician network, reaching a peak of more than 40,000 visits per day and currently accounts for approximately 20% of all visits;
• Pausing billing for COVID-19 treatment while additional assistance for patients was secured;
• Acquiring an ownership stake in a domestic manufacturer of PPE to bolster its supply chain;
• Working with federal, state and local health officials on response plans.

At the same time, CommonSpirit worked to manage its costs with as little impact as possible on its clinical care and workforce. Cost-saving measures like executive pay deductions and freezes on discretionary spending and capital projects were implemented early in March, with the system still applying a stringent review process for any new projects.

Strategic Direction

While CommonSpirit focuses on performance recovery in the near term, it is simultaneously setting a new strategic direction for its future. The organization has accelerated a strategic planning process and is once again making progress toward cost saving goals.

CommonSpirit continues to make major investments in growing its continuum of health care services in key markets. Virtual care will continue to play a major role moving forward as new regulations ease providers’ ability to deliver care across state lines. And CommonSpirit continues to make progress toward becoming a leader in value-based care; the organization now serves more than 2.5 million patients as part of value-based care arrangements.

As the pandemic has exposed significant health disparities, CommonSpirit has also made a public commitment to advancing health equity and social justice by examining how it provides upstream social services, increases access and cares for patients with chronic conditions.

“The pandemic has only reinforced that we need to make changes if we’re going to improve health outcomes and sustain our organization long into the future,” said Morissette. “As challenging as this year has been, it’s also an opportunity to accelerate our strategic planning. Now, we have sharpened our focus on expanding our continuum of pre- and post-acute services, continuing to take on risk in value-based arrangements, and positioning ourselves as leaders in advancing health equity for every person in our communities.”

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About CommonSpirit Health:

CommonSpirit Health is a nonprofit, Catholic health system dedicated to advancing health for all people. It was created in February 2019 through the alignment of Catholic Health Initiatives and Dignity Health. CommonSpirit Health is committed to creating healthier communities, delivering exceptional patient care, and ensuring every person has access to quality health care. With a team of approximately 150,000 employees and 25,000 physicians and advanced practice clinicians, CommonSpirit Health operates 137 hospitals and more than 1000 care sites across 21 states. In FY 2019, Catholic Health Initiatives and Dignity Health had combined revenues of nearly $29 billion and provided $4.45 billion in charity care, community benefit, and unreimbursed government programs. Learn more at www.commonspirit.org.