Even subtracting the state and federal assistance, Corewell Health's operating margin was nearly twice that of the first six months in 2022.
The midyear 2023 financial results compare to the $117.3 million in net operating income that Corewell Health generated in the first half of 2022 on $6.58 billion in total operating revenue that included $56.1 million in state and federal funding. That equated to a 1.8% operating margin, or 0.9% when excluding the state and federal money.
"I'm encouraged by system performance in the second quarter and year over year," Corewell Health CFO Matt Cox wrote in an email to Crain's Grand Rapids Business. "We have seen improvement in overall financial performance for our system. However, we are always looking at ways to improve the way we serve our communities. Teams are working diligently to control costs and to provide the high-quality care and coverage our patients and members expect from us."
Cox noted that Corewell Health, like other health systems, continues to experience rising costs for staffing through higher wages and salaries, and for supplies and medications.
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The $2.76 billion in salaries, wages and benefits Corewell Health paid in the first half increased 8.2%, or by $210 million, from the same period in 2022. The cost for supplies increased 19%, or $294 million, to $1.83 billion in the first half of 2023.
"Across the country, health care organizations continue to face staffing and inflation challenges. Like we see prices rising in our own personal home expenses, prices for supplies and pharmaceuticals continue to climb for health systems like ours — although at a slower pace now than last year," Cox said. "Health care organizations also are continuing to see expenses rise due to increased salaries and wages, largely driven by spending on agency and critical staffing. Corewell Health continues to work toward finding innovative solutions, such as working with colleges and universities to create scholarship programs and additional slots in educational programs and apprenticeships."
Other revenue sources, including $465.3 million earned from investments, drove Corewell Health's total net income to $580.4 million for the first half. The health system ended the second quarter with 215.7 days of cash on hand, up from 209.8 days at the end of 2022.
The care delivery side of the health system generated $4.03 billion in net patient revenue and Priority Health, Corewell Health's 1.3 million-member health plan, had $3.23 billion in premium income. Priority Health recorded a 2.4% operating margin in the first half.
This story first appeared in Crain's Grand Rapids Business.
