CommonSpirit Health Announces Q1 FY 2020 Financial Results

CHICAGO—Nov. 18, 2019—CommonSpirit Health, formed nine months ago through the alignment of Catholic Health Initiatives and Dignity Health, posted a modest increase in revenue and an overall operating loss in the first quarter of the current fiscal year as it continues to effectively manage the complex integration of two large legacy health systems.

 

Revenues for the Chicago-based national health system rose to $7.17 billion, a 1% increase over the prior year period, while the organization posted an overall operating deficit of $227 million – a figure that does not reflect an expected addition of pending California provider fee income that will effectively cut that loss almost by half. When including expected provider fee income, revenues grew 4.7% and the operating loss was reduced to $119 million. EBITDA for the quarter was $246 million, or $354 million when including the expected provider fee net income.

 

“We are encouraged by the growth of revenue and volumes as we expand our services, and we remain focused on achieving significant savings and growth as we build our organization in this challenging environment for health care,” said Daniel Morissette, the organization’s senior executive vice president and chief financial officer. “CommonSpirit is continuing its integration efforts that include a transition to a new operating model and a strategy that focuses on preventive care, improved patient experience, and customized and coordinated services across the entire continuum of care. We know we have work to do to improve our operations, and we’re pleased with our progress given the complexities of bringing together two established health systems into a new, national health ministry.”

 

CommonSpirit saw volume growth improve modestly in the quarter, with adjusted admissions increasing 2.3% compared to the same period in the prior year. The operating loss for the quarter ending in September can be attributed in part to a delay in CMS approval for the new cycle of the California Provider Fee program. During the three-month period in the prior fiscal year, CommonSpirit recognized $232 million of net patient revenue, and $124 million of purchased services and other expenses, from this program, resulting in net additional income of $108 million. A number of other non-cash items also impacted earnings for the quarter as compared to prior year.

 

CommonSpirit, which operates 142 hospitals in 21 states, was formed Feb. 1 through the merger of Catholic Health Initiatives and Dignity Health.  In August 2019, CommonSpirit completed a highly successful $6.5 billion debt restructuring, drawing significant demand from investors and support from financial analysts who cited CommonSpirit’s geographic reach and diversity of services as key factors in positioning the health system for long-term success. The restructuring is expected to save the organization tens of millions of dollars.

 

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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 healthy communities, delivering exceptional patient care, and ensuring every person has access to quality health care. With its national office in Chicago and a team of approximately 150,000 employees and 25,000 physicians and advanced practice clinicians, CommonSpirit Health operates 142 hospitals and more than 700 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 commonspirit.org.