Ballooning expenses related to the COVID-19 pandemic prompted a wider operating loss for Tower Health in the period ended March 31, 2020.
West Reading, Pa.-based Tower reported a nearly $132 million operating loss in the nine months ended March 31, 2020, compared with a $48.5 million loss in the prior-year period.
Tower's expenses shot up 19.2% in the 2020 period to $1.7 billion compared with expenses of $1.4 billion the prior-year period. The health system's Epic implementation at newly acquired hospitals accounted for $7 million in nonrecurring expenses.
Tower said it implemented Epic in August 2019 at all five of its hospitals in Chester, Montgomery and Philadelphia. In March 2020, Tower installed Epic across all of its urgent care centers. Tower said it plans to have Epic up and running at its St. Christopher's Hospital for Children in February 2021.
The health system's expenses also included a 22.5% jump in salaries and benefits—far and away the largest expense category. Not-for-profit Tower said in a statement accompanying its financial results that it spent a lot in the 2020 period on retaining clinical personnel and amassing supplies to meet the expected surge in COVID-19 patients.
Tower's revenue grew 13.8% to $1.6 billion in the nine months ended March 31, 2020, compared with $1.4 billion in the 2019 period. The health system said its revenue and volumes declined significantly after Pennsylvania's stay-at-home order took effect on March 19. The governor also directed hospitals to suspend all elective surgeries, prompting Tower to close five of its urgent care centers and dedicate them to COVID-19 testing.
Tower received about $66 million in grant funding through the Coronavirus Aid, Relief, and Economic Security Act, with additional funding likely. Tower also received $166 million in accelerated Medicare payments from CMS in April.
Tower's flagship Reading Hospital continued to perform well, producing $111.3 million in operating income, a 13.4% margin, in the nine months ended March 31, 2020, compared with a 13.8% margin in the prior-year period.
The health system said it's in the final stages of a sale-leaseback transaction involving 24 medical office buildings that's expected to generate about $200 million in cash proceeds in June.
