Advocate ended its fiscal year 2023 in December with a 1.9% operating margin, the records show. That was slightly lower than the median U.S. hospital margin of 2.3% in December, according to data from Kaufman Hall, a Chicago-based health care consulting firm.
Advocate Aurora and Atrium finalized their blockbuster merger in December 2022, creating a Charlotte, N.C.-based health system that operates 1,000 sites of care and 68 hospitals in six states.
Because 2023 was Advocate’s first year as a combined organization, 2022 figures for comparison are unavailable. However, both Advocate Aurora and Atrium independently performed better in 2023 than the year before, when many hospitals posted negative operating margins coming out of the COVID-19 pandemic.
Advocate Aurora, the Illinois and Wisconsin portion of the organization, saw revenue grow 8% to $15.75 billion in 2023 and posted a surplus of $774 million, compared to a shortfall of $750 million the year before, financial records show.
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Meanwhile, Atrium, which serves patients in North Carolina, South Carolina, Georgia and Alabama, saw revenue grow 19% to $9.17 billion. Atrium posted a surplus of about $1 billion, compared to a shortfall of $1.15 billion the year before.
The rest of Advocate’s 2023 revenue came from Atrium’s Wake Forest Baptist, an integrated clinical, research and academic enterprise operated by Wake Forest University Baptist Medical Center in North Carolina. The entity reported $4.7 billion in 2023 revenue and a surplus of more than $226 million.
"Our combination has enabled us to achieve efficiencies amid increases in patient volumes," an Advocate spokesperson said in a statement to Crain's. "We’re committed to using our scale and combined capabilities to uplift our communities and lead the nation in reshaping health care for all."
Co-CEOs Jim Skogsbergh and Eugene Woods told Crain’s in December they expected to end 2023 with a positive operating margin as pandemic-era pressures eased and the organization realized financial efficiencies from the merger.
When the merger was announced, the organizations said joining forces would allow them to meet various goals, lowering costs chief among them. Woods said in December that Advocate tripled its savings goals as it found synergies in back-office operations and other areas.
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According to the financial records, the Atrium side of the business specifically saw revenue grow due to larger patient volumes, service line expansions, improved payor mix and increases to reimbursement rates, among other things. Discharges, surgeries, and emergency room and medical group visits all increased year over year, too.
Expenses related to salaries, wages and benefits, as well as pharmaceutical and supply costs, were up in 2023, but revenue gains covered it all, records show.
Other local health systems, including Northwestern Medicine, have also recovered from pandemic-era slumps. Northwestern posted a $1.1 billion surplus in its 2023 fiscal year, ended Aug. 31, as patient volumes grew.
This story first appeared in Crain's Chicago Business.
