CommonSpirit Health Announces Third Quarter Financial Results

CHICAGO – May 14, 2021 — CommonSpirit Health released financial results today for the third quarter of fiscal year 2021, posting improved overall operating results compared to the previous year’s quarter even as the national health system continues to face headwinds from the ongoing COVID-19 pandemic.

The Chicago-based health system recorded operating income of $539 million for the three-month period ending March 31 – a figure that included continued federal funding to help manage the pandemic as well as pre-tax gain on the sale of joint venture shares, which amounted to $523 million of the total recorded operating income. CommonSpirit posted an operating loss of $117 million excluding those two sources of funding, highlighting the continuing concerns around overall patient volumes and the ongoing impact of the pandemic.

Despite the winter surge in COVID-19 cases as well as the February winter storms that impacted demand for care at the start of the quarter, CommonSpirit continued to see volumes remain near pre-pandemic levels, as it focused on encouraging patients not to delay needed care. The vaccine rollout was also a major priority for the organization: CommonSpirit has administered more than 1.2 million vaccines, many of them to underserved and high-risk communities, through its hospitals, clinics and community events. More than one hundred CommonSpirit locations have been approved by the federal Centers for Disease Control and local state health departments to administer vaccines.

The reported EBITDA was 11.7% for the quarter. Excluding CARES Act grant revenues and the gain on the sale of joint-venture shares, EBITDA was 4.6% with operating revenues of approximately $8.2 billion, compared to a 1.8% EBITDA margin and $7.8 billion in recorded revenues for the same period in the prior year. Normalizing the California provider fee revenues in the prior year three-month period, net patient and premium revenues increased $677 million, or 9.7%. Drivers of the results included a stable payor mix and higher acuity, which was partially offset by improved — but continuing — volume shortfalls. By the end of the quarter, adjusted admissions on a same-store basis remained about 6% below pre-pandemic levels.

“In many ways this quarter was similar to what we experienced over the last year, with a very challenging period followed by a robust recovery,” said CommonSpirit Chief Financial Officer Dan Morissette. “With vaccination rates rising and many people returning to their pre-pandemic routines, we expect to continue a strong path to recovery, while also recognizing that we will likely see operational impacts from the pandemic for quite some time. This is our new normal, and we are well-positioned to succeed in this environment in the months and years ahead.”

CommonSpirit enters the next phase of the pandemic with confidence that stems from more than a full year’s experience managing the COVID-19 crisis across 140 hospitals and more than 1,000 care sites in 21 states. The health system, which has safely reopened all facilities and services across its national footprint, established three key objectives at the start of the pandemic: Ensure the safety of staff and patients; continue to offer vital services to its communities; and provide the kind of leadership, collaboration and innovation that will ultimately result in improved care and equity across the national enterprise. During the third quarter, the COVID-19 patient census declined almost 85%, decreasing to 602 on March 31, and has remained steady through April after hitting a peak of 3,685 patients during a wave of infections across the nation in early January.

Highlighting a trend in the industry toward outpatient care and virtual visits outside hospital walls, the number of emergency department visits fell to about 786,000 in the third quarter from approximately 985,000 in 2020, while outpatient visits increased to about 6.7 million from approximately 6.4 million in the year-ago quarter. Same-store acute admissions, meanwhile, dropped to about 185,000 from approximately 199,000 in the same period of the previous year. Demand for virtual visits remains strong, even as in-office visits have rebounded, and now account for about 15% of total visits.

CommonSpirit has expanded ambulatory surgical center relationships in several states during the fiscal year. The third quarter was also the first period to fully include the new Virginia Mason Franciscan Health, the result of the combination of Virginia Mason and Franciscan Health in the Pacific Northwest, and Yavapai Regional Medical Center in Arizona.

In FY21, CommonSpirit recorded approximately $617 million in provider relief funds revenue in support for its 140 hospitals through the CARES Act, which provides stimulus in the form of financial aid to cover extensive emergency funding to hospitals and providers to respond to the challenges of COVID-19. While these funds have been an essential source in mitigating the financial challenges since the start of the pandemic, they do not fully cover the pandemic-related losses incurred during the pandemic.

The organization’s focus on the future includes strengthening CommonSpirit’s financial foundation. This includes financial and operational synergy efforts planned as part of the combination of Catholic Health Initiatives and Dignity Health that created CommonSpirit in February 2019. The organization’s goal is to realize $350-400 million in savings during FY21, and it is currently on track to meet or surpass that total.

This effort has been combined with a rigorous approach to expense management during the pandemic, and a heightened focus over the last several months on “re-opening” facilities quickly – and safely – to better serve communities and those in need of vital medical care.

###
About CommonSpirit Health
CommonSpirit Health is a nonprofit, Catholic health system dedicated to advancing health for all people. It was created in February 2019 by Catholic Health Initiatives and Dignity Health. With its national office in Chicago and a team of approximately 150,000 employees and 25,000 physicians and advanced practice clinicians, CommonSpirit operates 140 hospitals and more than 1,000 care sites across 21 states. In FY 2020, CommonSpirit had revenues of $29.6 billion and provided $4.6 billion in charity care, community benefit, and unreimbursed government programs. Learn more at www.commonspirit.org.