Catholic Health Initiatives ended its first quarter with an operating surplus, unlike a year ago, as expansion and patient demand helped boost revenue. But lousy investment return drained cash from the system's balance sheet and left CHI with a net loss for the quarter.
More patients visited CHI's hospitals, emergency rooms and clinics during the three months that ended Sept. 30 than during the same period a year ago, which contributed to an 11% increase in revenue from treating patients.
The Englewood, Colo.-based system, which operates across 18 states, also reported a revenue gain of $141.7 million from a joint management and operating agreement with the Longmont (Colo.) United Hospital.
CHI has rapidly expanded in recent years, scooping up new hospitals and branching out into health insurance. Since the first quarter last year, the system has acquired several hospitals. CHI acquired six-hospital Sylvania Franciscan Health in November 2014 and St. Alexius Medical Center in October that year. Fast growth has strained the system's finances, but CHI slashed expenses last year to turnaround its losses and end the year with a surplus.
Revenue from premiums brought in from the system's growing insurance arm totaled $129.5 million for the quarter, up nearly 50% from the same period a year ago. Still, revenue from insurance accounts for roughly 3% of total operating revenue.
Overall, operating costs increased 16% to $4.03 billion, easily outpacing expenses, which grew 12% to $4 billion. The system's surplus for the quarter totaled $6.8 million after restructuring and other losses. That's compared with last year's loss on operations of $121.5 million.
Investment losses of $282.5 million and other non-operating losses erased that operating surplus and left CHI with a net loss of $336 million for the year. Losses on the system's interest rate swaps totaled another $58.5 million.
The system's cash reserves dwindled in the first quarter. By one measure—the number of days CHI could operate using cash in reserve—the system has seen a 13% drop in its cash cushion. CHI reported 155 days cash on hand on Sept. 30. That's compared with 178 days of cash as of June 30.
