Sacramento, Calif.-based Sutter Health recorded a stronger financial performance in 2021 after it called 2020 one of the "toughest financial years" in the organization's 100-year history.
The health system recorded a $199 million operating income in 2021, a rebound from the $321 million operating loss recorded in 2020.
"We're making significant progress on our path to recovery, but we continue to face strong financial and inflationary headwinds," said James Conforti, Sutter's interim CEO. "We must stay focused on efforts that help our integrated network reduce costs and streamline our operations as these are integral to our affordability and to serving our communities well into the future."
Sutter Health posted revenue of $14.2 billion in the 12-months ending Dec. 31, 2021, an increase of about $1 billion from 2020. Although its revenue increased, so did the system's expenses. In 2021, Sutter recorded expenses of $14 billion, up from $13.5 billion recorded in 2020.
Overall, after factoring in investment income of $758 million, Sutter Health ended 2021 with a net income of $1.1 billion. In 2020, Sutter Health recorded a net income of $134 million.
Despite seeing improved finances in 2021, which the health system attributed to its organizational recovery work, Sutter Health said financial challenges like inflation and rising labor and supply costs remain.
Specifically, Sutter Health said inflation is adding $500 million in additional costs per year, its labor costs continue to climb and rising drug costs now account for 7 percent of its operating costs.
"Over the next year, Sutter will continue its work through efficiencies and cost savings including increasing its reliance on generic drugs, using fewer suppliers of the same products and adopting new and upgraded software to streamline services" Sutter Health said.