ProMedica Health System's senior care unit recorded a $275 million operating loss last year, the not-for-profit company announced Friday.
ProMedica made a play for the senior living market when it spent $1.4 billion to acquire post-acute care provider HCR ManorCare in 2018. Although Promedica's senior care division recorded a 1.4% operating margin in 2020, it fell to -10% last year, the company disclosed in a presentation to investors. The business line's operating revenue declined from $2.97 billion in 2020 to $2.75 billion in 2021.
Last year, ProMedica Health System sold off 21 senior care locations, which collectively lost $46 million in 2021, and plans to divest four more this quarter, Chief Financial Officer Steve Cavanaugh said during a call with investors. ProMedica also acquired nine skilled nursing facilities and four assisted living/memory care sites in 2021.
The Toledo, Ohio-based health system saw its consolidated operating margin sink into negative territory from 0.7% in 2020 to -2% last year even as operating revenue grew from $6.86 billion to $6.93 billion.
Cavanaugh attributed the company's troubles in 2021 to patient volumes that are still below pre-pandemic levels, labor shortages and less federal COVID-19 aid. The company received $360 million in pandemic relief funding in 2020 and just $99 million last year, the ProMedica reported.
The COVID-19 omicron variant sidelined thousands of workers and led the health system to raise wages and award retention bonuses, Cavanaugh said. ProMedica expects workforce issues to be a headwind this year, too, he said.
"The nursing home industry, in particular, has been one of the most challenged around labor costs and staffing costs," Cavanaugh said. "At least the people we do have employed today are actually working and not at home in quarantine."