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Providence reports $214M in operating losses due to COVID-19-related expenses

A positive side for Providence is its expanded virtual care offerings, which are expected to reach 1.4 million video visits by the end of the year.

Mallory Hackett, Associate Editor

The financial impacts of COVID-19 continue to be felt by the nation's hospital systems as Providence has reported $214 million in operating losses for the first nine months of 2020.

Although the 51-hospital health system brought in $18.9 billion in operating revenues, it incurred $19.1 billion in operating expenses over the same period of time.

This marks a 4% increase from last year, due to increased costs of labor, supplies and pharmaceuticals needed to respond to COVID-19, the system said in its release.

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WHAT'S THE IMPACT?

Even after receiving $682 million in Coronavirus Aid, Relief, and Economic Security Act funds, Providence posted an operating EBIDA of $0.8 billion, or 4.3% of net operating revenues, compared with $1.2 billion for the same period in 2019.

The third quarter did see some improvements for revenues, with the operating margin for Q3 reaching 5.3%.

Its year-to-date nonoperating income was $263 million, compared to $772 million for the same period in 2019.

Additionally, its year-to-date volumes, as measured by case-mix adjusted admissions, were 10% lower than the year before.

Despite a rough financial posting, a positive side for Providence is its expanded virtual care offerings, expected to reach 1.4 million video visits by the end of the year, according to president and CEO Dr. Rod Hochman.

THE LARGER TREND

A look at Kaufman Hall's latest National Hospital Flash Report indicates that Providence is not the only system with losses.

Hospitals' median operating margin index stood significantly lower than in 2019, coming in at 2.7% year-to-date through September, including the CARES Act funding. Without it, the median operating margin index was -1.9%.

The EBITDA margin index through September was 7.5% year-to-date with CARES funding, and 3.2% without the funds.

Hospitals saw their September operating margins increase year-over-year from 2019, despite lower volumes for the seventh month in a row. They rose 8.1% year-over-year and were 7.8% above budget without CARES funding. With the funds, operating margins went up 15% year-over-year and were 12.2% above budget.

The higher revenues through September were offset by rising expenses, which were 1.8% year-to-date and 3.5% year-over-year.

Analysts at Kaufman Hall warned of upcoming challenges as rapidly increasing COVID-19 cases coincide with flu season.

ON THE RECORD

"As I look back on the first nine months of the year, I am incredibly proud of how the caregivers of Providence have stepped up to meet the challenges in front of us," Hochman said. "We have many more months of COVID-19 ahead, and we are committed to continue navigating the pandemic and ensuring the health and safety of our caregivers and those we serve."

Twitter: @HackettMallory
Email the writer: mhackett@himss.org