Leaders with Providence St. Joseph Health have energetically touted the system's new strategic direction: more ambulatory care and less traditional hospital care. But a bigger share of its revenue came from hospitals in the beginning of 2019 compared with the same period in 2018.
The Renton, Wash.-based system's 51 hospitals brought in 66% of its total operating revenue in the first quarter of 2019, which ended March 31, compared with 63% in the first quarter of 2018. Outpatient activities made up 12% of revenue in the recently ended quarter, compared with 11% in the prior-year period. The not-for-profit system also delivered fewer outpatient visits in the first quarter of 2019 than in 2018.
Elizabeth Brophy, a spokeswoman for Providence St. Joseph, said the system is no less committed to the transition.
"As it relates to our ambulatory care strategy, we're still very much pursuing that strategy," she said.
A number of factors put a damper on Providence St. Joseph's operating results in the first quarter of 2019. The Catholic system saw a $4 million operating loss in the quarter compared with operating income of $25 million in the prior-year period. The system said the loss was due to restructuring costs in the recently ended quarter.
Providence St. Joseph's operating revenue was $6 billion in the first quarter, only $32 million higher than the first quarter of 2018. Expenses also remained at about $6 billion in both quarters, increasing by just $31 million year-over-year. The system said that was partly due to a 6% increase in drug spending and a 3% increase in salary and benefit expenses.
The system drew $332 million in operating earnings before interest, depreciation and amortization in the first quarter of 2019, down 5.4% from $351 million in the first quarter of 2018. Not counting $30 million in restructuring costs, the system said operating EBIDA was up 3% year-over-year.
Providence St. Joseph blamed its earnings slump on a weak flu season and inclement weather that kept people from seeing doctors. More surgeries and procedures, especially in the ambulatory setting, helped offset some of the damage. Surgery and procedure volume grew 9% year-over-year to 167,000 in the first quarter of 2019.
The health system drew $543 million in excess revenue over expenses in the first quarter, up significantly from a deficit of $9 million in the prior-year period. That was thanks to significant non-operating gains.
Volumes were a mixed bag and didn't reflect the vision of less inpatient care and more outpatient care. The system delivered slightly fewer outpatient visits year-over-year, with roughly 6.8 million such visits in the first quarter of 2019. Emergency room visits were down 2.5% to 534,000 visits in the recently ended quarter. On the inpatient side, admissions declined 1.5% to 129,000 visits. Acute patient days were relatively flat at 640,000. Long-term care days were also flat.
Providence St. Joseph has said it plans to expand its ambulatory care network to 5 million annual visits from more than 500 sites by 2022. Currently, the system's ambulatory network delivers 3 million visits per year from about 200 sites.
In addition to its hospitals, Providence St. Joseph has more than 1,000 clinics across seven Western U.S. states. Southern California is its biggest market by revenue, at 29%, followed by Oregon.