The momentum behind CommonSpirit's financial rebound hit a speed bump in the third quarter of the fiscal year as the health system reported operating losses of $365 million and $411 million during the three- and nine-month periods ending March 31, 2024, compared to losses of $619 million and $1 billion during the same periods the year prior.
"Our earnings are not where we need them to be," CFO Dan Morrisette told investors during a May 23 investor call. "After a much stronger second quarter, the momentum stalled a bit despite our efforts to offset the headwinds on the revenue and inflation front. We continue our efforts to drive towards an improved level of performance."
Recent results showed solid volume improvement across the 142-hospital system with both inpatient and outpatient volumes increasing year over year.
Same store adjusted admissions in the third quarter grew by 4.5%, resulting in year-to-date same store admissions growth of 5.5% year over year. Same store inpatient cases increased by about 5.6% for the quarter and 5.5% year to date.
Patient volumes are rebounding and normalized operating revenue grew by $2.3 billion, or 9.2%, compared to last year, but revenue inflation is still lagging compared to expense inflation.
"While our value capture initiatives and improved volume have helped offset this inflation gap, we have more to do on this front," said Benjie Loanzon, senior vice president, finance and corporate controller.
Chicago-based CommonSpirit said its growth is driven by better utilizing resources through improved patient access, physician productivity and continuity of care. It is also investing in higher growth markets, in ambulatory growth and other verticals across the continuum.
The system also plans to scale pharmacy, supply chain and purchased services, as well as its internal nurse registry and physician locums programs. It is also taking a tougher stance with commercial payers.
"It's critical that we get paid appropriately for the care that we provide," Mr. Morrisette said. "This includes improving our revenue cycle function, denials, clinical documentation, underpayment reviews, patient collections and revenue cycle performance with our partners. "We need to be paid consistent with our contracts, and we're also taking a very firm stance with contract renewals so patients absorb a share of the inflation and the processes and terms are improved so we get paid appropriately and in a timely way."