The COVID-19 pandemic has pushed not-for-profit Providence's already thin operating margin into loss territory.
The Renton, Wash.-based system posted a $221 million operating loss in the six months ended June 30, or a 1.8% loss margin, on $12.5 billion in revenue. That's compared to a $250 million operating gain on $12.6 billion in revenue, a 2% margin, in the prior-year period.
Providence said its patient service revenue dropped 10% in the first half of 2020 year-over-year because of the elective procedure suspension that began March 16. At the same time, expenses crept up from higher supply and labor costs.
Inpatient admissions across Providence's 51 hospitals fell 14% in the quarter year-over-year to 220,290. Outpatient visits fell 13% in that time. Emergency room visits fell almost 19%.
Providence said its volumes have stabilized since it reopened services in May in coordination with regulators in the seven states it in which it operates.
Providence received $1.6 billion in accelerated Medicare payments and $827 million in federal stimulus grants, of which the system recognized $651 million as revenue.
To improve liquidity, the system said it is halting new capital projects outside of those focused on COVID-19 and patient and caregiver safety. The system has reduced discretionary spending, such as on travel, contractors and purchased services.
So far, Providence said it has relied on voluntary furloughs, overtime and contract labor to flex its labor costs in accordance with demand. If patient volume doesn't return as expected, the system said it might need to resort to "involuntary options."
In July, 700 Providence workers went on strike, protesting a contract they said would reduce paid time off and sick leave and increase healthcare costs.
Earlier this month, Providence Services Group, which is owned by the system, announced it acquired a Meditech consulting firm, adding to its roster of electronic health record consulting services. Navin, Haffty & Associates, a nearly 20-year-old private company, did not disclose financial details of the transaction.
Late last week, Providence announced its Chief Financial Officer, Venkat Bhamidipati, has accepted a role with a technology company in the Bay Area. Bhamidipati, an ex-Microsoft executive, stepped into his C-suite role three years ago. Greg Hoffman, the system's chief transformation officer, will take over as interim CFO, effective Sept. 1.
