Advocate Aurora bounced back to black in 2020 after rough first 6 months

Hospital Administration

Dive Brief:

  • Advocate Aurora Health, a large Midwest health system, was able to remain in the black in 2020 in spite of the COVID-19 pandemic, which severely disrupted operations. Operating income and net income did shrink compared to the year prior due to fewer patients seeking care.
  • The nonprofit reported utilization was down in key categories when comparing 2020 to 2019. The largest declines included outpatient visits (20.2%), physician visits (11.1%) and observation cases (20.7%). Discharges fell 8.6% year over year, a less severe dip than other categories.
  • Federal funds aided the system as it navigated through the pandemic. It received and recognized about $787 million in the COVID-19 relief aid that helped many providers weather the economic downturn spurred by the crisis.

Dive Insight:

Many hospitals and health systems reported significant financial downturns in the first six months of 2020, yet, as the rest of the year unfolded some systems were able to remain profitable thanks in part to federal funds intended to prop up the sector.

Advocate Aurora rebounded by the end of the year after reporting both an operating and net income loss at the end of the first six months. For the full year, the system posted operating income of nearly $213 million and net income of $558 million. Although it represents a turnaround from the end of June, ;it’s still a significant drop from 2019.

Thanks to multiple pieces of legislation, the federal government earmarked $175 billion in funds for providers to help them weather the pandemic. For many systems, the money helped replace lost revenue as patients deferred care either due to government restrictions or fear of returning for in-person care.

One report shows that hospitals lost $20 billion due to pausing elective procedures last year.

Congress did pass another massive COVID-19 package, but it does not include additional relief funds for all providers and hospitals, drawing disappointment from the hospital lobby. The bill did include $8.5 billion for rural facilities.

While the funds have propped up some providers, others were able to manage just fine without it. Some major systems, including HCA Healthcare returned all the funds they received.

An analysis by Healthcare Dive found many health systems received significant shares of the bailout funds even though they sat on sizable cash reserves that could be liquidated over time. It raised concerns about the need to perform a greater examination of hospital finances before divvying up rescue packages.

Hospital performance at the end of 2020 seems mixed.

Washington-based Providence was able to claw back to a profit after reporting a loss through the first six months, but not all systems were able to do the same. Sutter Health reported an operational loss for the full year and said it was launching a “sweeping review” of its finances and operations.

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