Minneapolis-based Allina Health reported an operating loss of $63.2 million (-4.5% margin)in the second quarter, a 49% improvement on the $122.7 million loss (-9.6% margin) reported in the second quarter of 2023.
Before restructuring expenses, Allina's operating margin was -2.3% for the six months ended June 30, compared to -8.9% for the same period in 2023. The health system's operating loss improved by $161 million year over year for the six-month period.
CFO Doug Watson told Becker's that a "back-to basics-thinking" helped drill down into the key drivers of the health system and improve areas including patient throughput and scheduling.
Revenue for the three months ending June 30 increased 9.1% year over year to $1.39 billion while expenses increased 2.7% to $1.44 billion, according to financial documents published Aug. 14. Second-quarter salaries and benefits costs decreased 1.2% year over year to $853.6 million.
Two strategic partnerships with Optum and Quest Diagnostics were also a key part of Allina's turnaround strategy.
Effective May 5, Allina outsourced its IT and revenue cycle functions to Optum, part of UnitedHealth Group. About 2,000 employees moved to Optum in the process. Allina also signed an agreement to sell some lab assets to Quest Diagnostics in June.
"Just because you've been doing something a certain way for a long time, doesn't mean that that's the best way for you to do it," Mr. Watson said. "Give thought to who your partners are, and are there partners that can help you accelerate things in a way that you can't do on your own, that then help benefit the organization and then you can focus on other things that really you have to do yourself."
Net loss for the second quarter was $21.9 million, improving on the $70.1 million net loss reported in the same quarter last year.
The 12-hospital system had 172 days cash on hand as of June 30, compared to 174 on Dec. 31. Its long-term debt stands at $1.68 billion.