West Reading, Pa.-based Tower Health, a three-hospital system, reduced its operating deficit by more than $70 million to $141.9 million in fiscal year 2023 and aims to be back in the black in 2024, according to financial documents published Aug. 29.
For the quarter ended June 30 — the fourth quarter of fiscal year 2023 — Tower reported a $14.5 million operating loss, an improvement on the $38 million operating loss it posted in the previous quarter.
In the fourth quarter of FY 2023, total revenue increased by 2.3 percent over the prior quarter, and the system had a -2.7 percent operating margin in comparison to a -7.2 percent margin in the third quarter.
In FY 2023, total revenue increased 0.4 percent year over year; Tower reported a -6.5 percent operating margin for the 12 months ended June 30, 2023, compared with a -9.8 percent margin for the same period in FY 2022. Tower's operating cash flow margin for the 12 months ended June, 30, 2023, was -0.5 percent, compared with -2.7 percent for 12 months ended June 30, 2022.
Tower was cash flow positive by almost $6 million in the fourth quarter of FY 2023 and is on budget through the first two months of FY 2024 to meet its goal of returning to profitability in 2024, according to the Philadelphia Business Journal
A sizable cash injection will also hit Tower's balance sheet when it sells Brandywine Hospital in Coatesville, Pa., to Philadelphia-based Penn Medicine. The proposed sale is expected to close in December, the health system said in its financial report.
"We are not quite where we strive to be … but we have made amazing progress," Tower CEO P. Sue Perrotty wrote in a memo sent to the system's staff, according to the Business Journal.