CommonSpirit Health is the latest nonprofit system hit with ongoing financial ramifications from inflation and labor shortages.
The Chicago-based health system on Tuesday reported a net loss of $397 million for its fiscal year 2023 first quarter, compared with a $269 million gain a year ago. Operating revenue came to $9.01 billion in the quarter, a 5.4% year-over-year increase. Operating expenses rose 5.6% to $8.99 billion. These results are not normalized for income related to the California Provider Fee program, a policy designed to support hospitals treating Medicaid enrollees and uninsured patients.
Expenses for salaries and benefits rose 5.1% from a year ago, and contract labor, overtime and premium pay contributed to the quarter’s increase. However, the system said it has seen a 43% reduction in contract labor costs since March. Supply costs dipped by 4.6%, while purchased services expenses increased by 13.4%.
CommonSpirit also weathered a $517 million net loss on investments in the quarter.
On Sept. 1, Trinity Health in Michigan acquired full ownership of $613 million of Iowa-based MercyOne, a health system jointly owned with CommonSpirit. The system reported a $34 million net loss on that sale in September.
In October, CommonSpirit issued two bonds to raise about $1.5 billion to refinance prior debt, reimburse prior capital expenditures and fund general corporate purposes. Lisa Zuckerman, senior vice president of treasury and strategic investments, said at that time the system's strategy is to enter the bond market every one to three years.