Providence $538M loss shows pandemic woes trump bailout funds in H1

Dive Brief:

  • Providence reported a net loss of $538 million for the first six months of 2020 due to the effects of the novel coronavirus as the integrated health system, like many others, weathered a downturn in volumes while experiencing an uptick in expenses.
  • Patient volumes are still depressed, though they have rebounded from the lows of March and April, the nonprofit organization said in its filing Monday. Adjusted admissions for the first half of the year were down 13% year over year.
  • Due to the squeeze on volumes, total operating revenues sunk 1.3% to $12.5 billion while operating expenses climbed nearly 3% to $12.7 billion, resulting in an operating loss of $221 million for the first six months of 2020. Last year, Providence posted an operating income of $250 million.

Dive Insight:

Unlike some other big hospital systems buoyed by federal funds, including Kaiser Permanente and the biggest for-profits, expenses and volume depression threw Providence’s financials into the red. 

“Maintaining staffing and supplies in preparation for a surge of COVID-19 in tandem with these net declines in volumes and corresponding revenues resulted in operating losses of $872 million before the recognition of $651 million of grants associated with the federal [Coronavirus Aid, Relief, and Economic Security] Act,” Providence reported. 

The Renton, Washington-based system operates 51 hospitals spanning seven states. In fact, a Providence hospital in Washington was the first facility to knowingly treat a COVID-19 patient in the U.S. 

Washington was among the first states battered by the virus. Providence also operates hospitals in areas of pronounced spread of the disease, including California and Texas. Not surprisingly, Providence’s operating revenue was hit hardest in Washington and Texas, each declining about 16% compared to the first six months of 2019. 

“We knew we were in for a marathon the moment we admitted our first patient with COVID-19 seven months ago,” President and CEO Rod Hochman, who is also a physician, said in a statement. 

As re-openings have occurred in various parts of the country, daily volumes at Providence facilities have rebounded variably, the system said. 

Overall, surgeries and procedures declined 23% compared with the prior-year period.