Ascension’s bottom line sustained a heavy blow from suspended elective procedures in anticipation of COVID-19 patients in fiscal 2020, and more than $1 billion in federal grants didn’t keep the health system in the black.
The 150-hospital Catholic health system, whose operations stretch across 20 states plus Washington, D.C., rounded out the year ended June 30 with a $639.4 million operating loss, a -2.5% margin. Add to that Ascension’s sizable investment loss, and its net loss hit $1 billion in its fiscal 2020, compared with $1.2 billion in net income in fiscal 2019.
“COVID-19 has been encountered across all Ascension markets, to varying degrees, and has had a negative impact on the system’s revenues and operating margin,” Ascension said in a statement accompanying its disclosure.
St. Louis-based Ascension received $1.1 billion in relief grants under the Coronavirus Aid, Relief and Economic Security Act, $883 million of which was recognized during the year. That money does not have to be repaid.
The health system also took in about $2 billion in advanced Medicare payments from CMS, which boosted its liquidity. Ascension ended the year with 284 days cash on hand, up from 271 in fiscal 2019. The system’s cash-to-debt ratio improved 10.8% to 246% because of the advanced payments.
Ascension’s revenue was effectively flat year-over-year at $25.3 billion. At the same time, expenses crept up 2.7% to $25.7 billion. The system’s fiscal 2020 operating loss represented a substantial swing from its $130.6 million operating gain in fiscal 2019.
The system said its higher expenses came in the form of merit pay and cost of living adjustments and onboarding more physicians and mid-level providers for service line expansions. Overall, salary and benefit expenses rose 2.5% year-over-year.
Supply expenses, by contrast, declined 1.6% in fiscal 2020 year-over-year, largely because the suspension of elective procedures meant buying fewer expensive implants involved in joint replacements. Before the pandemic, Ascension said its supply costs had been increasing due to rising surgery volumes and patient acuity.
Ascension’s volumes suffered greatly during the pandemic. Admissions fell 6% in fiscal 2020 year-over-year to about 764,000. Emergency department visits were down 10.4% in that time to 3 million, while urgent care visits fell 15% to about 558,000.
Inpatient and outpatient surgeries were down almost 10% in fiscal 2020 year-over-year to about 582,000, while physician office and clinic visits fell 2% in that time to 14.8 million.
Volumes recovered rapidly in the fourth quarter of fiscal 2020, with discharges in June 2020 at 90% of their June 2019 levels.
Before it suspended procedures, Ascension said its volumes had been trending favorably, with equivalent discharges up 1.4% in the eight months ended Feb. 29, 2020 compared with the prior-year period.
A higher case mix index and inflationary increases in payments from insurers in fiscal 2020 resulted in nearly 4% higher net patient service revenue per equivalent discharge compared with the prior year. Ascension said its higher case mix index was because of seriously ill COVID patients.
Ascension spent $665 million providing charity care in fiscal 2020, up almost 10% from the prior year, which the system said reflects more patients qualifying for financial assistance.
“As we continue our ongoing COVID-19 response, we remain focused on delivering safe, compassionate, personalized care for those who need it most,” the health system said in a statement.