CommonSpirit Health, a 140-hospital system based in Chicago, reported higher revenue but lower income in the three months ended Sept. 30 than in the same period a year earlier, according to financial documents released Nov. 16.
CommonSpirit, formed in 2019 through the merger of San Francisco-based Dignity Health and Englewood, Colo.-based Catholic Health Initiatives, saw revenues rise 10.7 percent year over year to $8.55 billion in the first quarter of fiscal year 2022, which ended Sept. 30. The increase was attributed to several factors, including higher patient volume levels, rate changes and new hospitals joining the system.
Expenses also increased in the most recent quarter, driven by higher labor and supply costs. Contract labor costs, overtime and retention programs and premium pay programs pushed labor expenses more than 16 percent higher year over year, CommonSpirit said.
CommonSpirit recorded operating income of $34 million in the three-month period ended Sept. 30, compared to $167 million in the same period last year. Excluding grants provided through the Coronavirus Aid, Relief and Economic Security Act, operating income for the most recent quarter totaled $32 million, compared to an operating loss of $25 million in the same quarter of 2020.
The system said its COVID-19 patient census spiked in early September to nearly 2,900 patients. Although that number is declining, it remains above 1,000, CommonSpirit said.
"Given the circumstances this was a very solid quarter for the organization," CommonSpirit CFO Dan Morissette said in an earnings release. "No doubt there is more room for improvement and growth. But when considering impacts from the Delta surge, increased labor and supply costs, and the lack of government aid compared to the prior year, we're pleased to have achieved a measure of financial sustainability."
CommonSpirit recorded $185 million in investment income in the first quarter of fiscal 2022, and the system closed out the period with excess revenues over expenses of $269 million. In the same period of 2020, the health system reported investment income of $626 million and net income of $800 million.
S&P Global ratings recently upgraded CommonSpirit's debt rating to "A-" from "BBB+". The credit rating agency said it expects the system to continue to execute on financial improvement plans and maintain break-even performance with support from investment income.