Despite receiving more than $180 million in federal COVID-19 grant funds so far this year, eight-hospital Beaumont Health reported a $146.7 million net loss during the first half of 2020, a 70 percent decrease from net income of $208.9 million for the same period in 2019.
"The COVID-19 pandemic in Michigan continued to put a strain on Beaumont Health's patient volumes, operating income and non-operating income throughout the second quarter of 2020," the Southfield-based system said.
"The effects of the pandemic are expected to continue to be felt throughout the remainder of the year as Beaumont has cared for more COVID-19 patients than any other health care system in Michigan."
While Beaumont's losses were higher than in previous years because of the COVID-19 pandemic, Beaumont's cash and investment reserves are stronger this year than last year, the system said.
For the first six months of this year, cash and investments totaled $3.23 billion, compared with $2.1 billion for the same period in 2019, a 53 percent increase. Unrestricted days cash on hand was 288.8 days in 2020 versus 182.4 days in 2019.
On operations, Beaumont said that its net operating loss was $48.4 million, a negative 2.3 percent operating margin, compared with net operating income of $76.2 million, a 3.3 percent margin for the same period in 2019. Non-operating losses through the second quarter were $79.8 million, compared to a non-operating gain of $142.7 million in the same period last year.
But at the end of the second quarter on June 30, Beaumont's bottom line was a net loss of $146.7 million on operating revenue of $2.1 billion, a 10 percent decrease from $2.32 billion for the same period in 2019. The net loss includes $79.7 million in investment losses.
The net loss was offset somewhat by revenue Beaumont collected from the federal CARES Act of $180 million, which many health care organizations received and does not have to be repaid, Beaumont said. Beaumont received a total of $321 million in CARES Act funding. The remaining $141 million received will be allocated in the second half of 2020, Beaumont said.
But the $146.7 million net loss also doesn't include $504 million in Medicare loans because those must be repaid later this year, Beaumont said.
Congress is debating a new COVID-19 relief bill that could provide additional funding to hospitals. Senate Republicans want to provide $25 billion to bailout hospitals as part of a $1.1 trillion package, according to Modern Healthcare, a affiliated publication of Crain's Detroit Business.
But House Democrats in May approved a $3 trillion relief package that includes $100 billion for hospitals, a number the American Hospital Association says is needed to help hospitals deal with massive financial losses.
John Kerndl, Beaumont's CFO, said Beaumont patient volume is slowly creeping back to levels before the pandemic hit Michigan hard in mid-March. He said surgeries, emergency visits and diagnostic services have increased in recent weeks.
To improve profitability, Beaumont has taken the following steps: pursuing federal and state COVID-19 financial relief programs; deferring planned capital expenditures unrelated to COVID-19; and cutting costs and scrutinizing staffing levels based on patient volume.
In late April, Beaumont furloughed 2,475 employees and permanently eliminated about 450 positions. Officials said 60 percent, or about 1,500 workers, have been recalled.