Cincinnati-based Bon Secours Mercy Health reported a $123.9 million operating loss (-1% margin) in 2023, improving on the $323.5 million operating loss (-2.9% margin) in 2022, according to financial documents published March 25.
The 49-hospital system saw revenue increase 10.1% year over year to $12.2 billion in 2023 while expenses grew by 8% to $12.4 billion. Labor costs increased 4.2% to $6.2 billion while supply costs increased 16.3% to $2.5 billion.
The $245.6 million increase in Bon Secours Mercy Health's labor costs was driven by increased patient volumes in 2023 as well as increased employment expenses related to the acquisition of Nordic Consulting Partners. These increases were partially offset by significant reductions in contract labor, according to the health system.
Agency costs declined from $504.1 million in 2022 to $256.2 million in 2023. This reduction in contract labor helped drive down total employee compensation as a percentage of net operating revenue from 58.2% in 2022 to 56.2% in 2023.
Days cash on hand decreased from 240 days in 2022 to 221 days in 2023, primarily as a result of capital expenditures and growth in cash expenses offsetting positive cash flows from operating results. Capital expenditures totaled $703.4 million in 2023 and included $268.9 million related to the construction of new hospitals and hospital expansions.
After accounting for nonoperating items, including investment returns, Bon Secours Mercy Health reported a net profit of $222.4 million in 2023, compared to a net loss of $1.2 billion the previous year.
Debbie Bloomfield, PhD, will retire as CFO at the end of 2024 after more than three decades with the health system. She will begin transitioning from her CFO role on July 1 and shift to financial leadership oversight of the system's subsidiaries.
Travis Crum, senior vice president of finance, will take over as CFO on July 1.