Chicago-based CommonSpirit is making significant strides to improve its financial performance — transforming a $440 million operating loss in the fourth quarter of 2022 into a $356 million gain in the fourth quarter of 2023 — but CFO Dan Morissette insists "there is still more to do."
Normalized for the California provider fee program, operating losses for the fiscal second quarter (the three-months ended Dec. 31) were $87 million, compared to normalized losses of $440 million during the same periods in 2022.
A big contributor to recent losses include labor and supply inflation increasing at a higher rate than reimbursement, but this has been partially offset by improved patient volumes, length of stay and productivity, the 142-hospital system said in a Feb. 15 financial report obtained by Becker's.
"We remain focused on further improving our financial performance by exploring growth opportunities, sound investment strategy and cost containment," Mr. Morissette said. "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."
In FY 2022, the system launched "CommonSpirit 2026," a five-year strategic roadmap. The framework aligned all of the system's mid- and long-range initiatives and workstreams — and their associated metrics — under three key pillars: "Our People, Our Excellence and Our Future."
Under the leadership of Wright Lassiter III, who took over as CEO in August 2022, the health system said efforts related to CommonSpirit 2026 have been injected with fresh perspectives and new strategies.
Consistent with FY 2024 priorities, the system has framed priorities for the upcoming FY 2025. Health system leaders have outlined five key areas to improve performance over the next 12 to 18 months and ensure the long-term financial sustainability:
- Achieve "One CommonSpirit," by defining a unified culture, brand and operations, aligning approaches to increase efficiency and leverage scale.
- Ensure the system is paid for the care it provides by working with payers and revenue cycle partners.
- Transform the CommonSpirit portfolio through diversification in non-acute verticals, strategic capital deployment, among other portfolio adjustments.
- Drive organic growth through expanded access points and better care coordination to facilitate consumer' utilization of the health systems' care networks.
- Launch a digital consumer experience to increase access to care for patients.
CommonSpirit is also evaluating the markets in which it operates to identify "market essentiality." This includes analyzing each market's current position and potential, defining strategies and aligning capital investments for maximum impact. Though not the primary intent, CommonSpirit said this may result in additional hospital acquisitions and divestitures.
Recent examples of this include the acquisition of five Utah hospitals from Steward Health Care hospitals in May. CommonSpirit also plans to offload two hospitals to UCSF Health in a deal that it says will create a stronger care network for residents in the San Francisco Bay Area.