Chicago-based CommonSpirit posted an operating income of $356 million (3.5% margin) in the quarter ended Dec. 31, a significant turnaround from the $440 million loss (-5.4% margin) reported in the same period the previous year.
Six things to know:
1. For the six months ending Dec. 31, CommonSpirit posted a $46 million operating loss (-0.2% margin), compared with a $395 million operating loss (-2.3%) during the second half of 2022, according to financial documents published Feb. 15.
2. CommonSpirit said operating results reflect the effects of labor and supply inflation increasing at a higher rate than reimbursement rates, but is partially offset by improved patient volumes, length of stay and productivity.
3. Normalized for the California provider fee program, operating losses for the three- and six-months ended Dec. 31 were $87 million and $340 million, respectively, compared to normalized losses of $440 million and $642 million during the same periods in 2022.
4. Current year results include a $234 million 340B settlement from CMS related to underpayment in prior years. The six-month prior year results include $234 million of Cares Act provider relief funding.
5. Year over year, fiscal second-quarter revenue increased 24.5% to $10.2 billion while expenses grew 14.1% to $9.8 billion. Under expenses, salaries and benefits rose 9.3% to $4.8 billion and supplies increased 4.7% to $1.4 billion.
6. After accounting for nonoperating items such as investment returns, CommonSpirit ended the fiscal second quarter with a bottom line gain of $1.1 billion, compared with an overall gain of $208 million during the same period in 2022.
"We are gratified to see our collective hard work result in improved financial performance this fiscal year, though we appreciate there is still more to do," CFO Dan Morissette said. "As a result, we remain focused on further improving our financial performance by exploring growth opportunities, sound investment strategy and cost containment. We are also taking steps to reverse some of the financial trends which have been exacerbated by both inflationary pressures and payers' continued unwillingness to be better partners."