Hundreds of millions in federal COVID-19 grants weren't enough to prevent Northwell Health from losing money in the first half of 2020.
The New Hyde Park, New York-based health system reported a $250 million operating loss in the first six months of 2020, a 4% loss margin, compared with $70 million in operating income in the prior-year period, a 1.2% margin. The 2020 loss is despite receiving $1.2 billion in grants under the Coronavirus Aid, Relief and Economic Security Act through Aug. 28, $754 million of which was recorded in the first half of the year.
Northwell said it recognized another $100 million worth of federal grants as revenue in July. The not-for-profit system has also taken in about $1 billion in accelerated Medicare payments, which must by fully repaid by May 2021 to avoid interest.
Northwell's 4% loss margin in the first half of the year was slightly improved from the system's 4.6% loss margin in the first quarter, which ended March 31. The health system said its non-COVID volumes began to recover in mid-April, shortly after its COVID-19 cases started to decline. By July, ambulatory visits were at 90% of their 2019 levels, compared with just 5% in April. Health center visits, including to urgent care clinics, were at 115% of their 2019 levels, compared with 63% in April.
Not including any of the federal relief grants, Northwell said the negative financial impact of the pandemic is estimated at nearly $1.2 billion in the first half of 2020, mostly because of suspended procedures at the height of the pandemic. Northwell said unaudited financial results from July show another $100 million in damage that month, with more expected depending on the trajectory of the crisis.
Northwell's revenue increased 4% year-over-year to $6.3 billion in the first half of 2020. The increase was almost entirely driven by CARES Act grants. Patient revenue declined almost 10%.
On the volumes front, discharges were down 16.3% in the first six months of 2020 year-over-year, and ambulatory surgery visits declined 42% in that time. Emergency department visits were down 24% year-over-year, and health center visits, including to urgent care clinics, fell 12%. Home care admissions declined 19%.
Northwell's operating expenses jumped 9.5% in the first half of 2020 year-over-year to $6.6 billion. The largest chunk, salaries and benefits, spiked 11.2% as a result of the pandemic. Northwell said that's because it paid bonuses to frontline workers, expanded its physician and ambulatory network and supported population health programs. Wage increases and staffing for various IT, safety and quality initiatives also played a role.
Northwell's supply expenses grew 6.3% in the first half of 2020 because of the cost of personal protective equipment, lab supplies, drugs and other pandemic-related costs. Northwell said supply costs would have been higher if not for the reduction in surgical volumes
Northwell's operating cash flow was $102 million in the 2020 period, compared with $397 million in the 2019 period. The health system saw a net loss of $329 million in the first six months of 2020, compared with net income of $393 million in the 2019 period.
