Dive Brief:
- Higher patient volumes and cost-cutting programs led Trinity Health to trim its operating losses in earnings for its first half fiscal year 2024.
- The nonprofit health system’s operating loss dropped from $270.3 million in the prior-year period to $38.6 million in the six months ended Dec. 31 — an 85% decline, according to earnings released Friday.
- While Trinity reduced some operating expenses, including contract labor costs, total operating expenses still rose almost 9% year over year to $11.7 billion, outpacing operating revenues, which totaled $11.6 billion.
Dive Insight:
Trinity increased operating revenues by 11.3% during the first six months of fiscal year 2024 compared to the prior year period.
Nonoperating income, including investment gains, boosted the Livonia, Michigan-based system to record an excess of revenue over expenses of $669.1 million. That’s compared to deficiency of $70.5 million in the prior year period.
Acquisitions and outpatient services revenue primarily drove Trinity’s revenue growth during the period, according to the earnings results.
Trinity attributed the majority of its operating revenue gain to three acquisitions of MercyOne in Iowa, North Ottawa Community Health System in Michigan and Genesis Health System in Iowa and Illinois. However, the system said revenue gains were slightly offset by Trinity’s divestiture of St. Francis Medical Center (SFMC), which reduced operating revenue by $59.3 million compared to prior year.
Trinity’s net patient service revenue also grew 5% compared to the prior year period. The system chalked the improvement up to increased patient volumes and improved payer rates.
Most of Trinity’s revenue came from outpatient services and other non-patient revenue, according to management. That’s in line with broader industry trends after the COVID-19 pandemic of providers focusing on outpatient service offerings to meet patient preferences.
Trinity’s outpatient visits increased 5.8% year over year, while emergency room visits rose 5.2%.
Despite its efforts to contain costs, Trinity continued to be pressured by macroeconomic headwinds, including reduced consumer spending, continued inflated costs of labor and supplies and on-going clinical labor shortages, management said.
The majority of Trinity’s $944.8 million in operating expenses were related to its acquisitions, according to the earnings filing. Excluding acquisitions and the the divestiture of SFMC, operating expenses would have been $326.6 million.
Trinity’s earnings were bolstered by investment income. The operator reported $738.7 million of non-operating income and $475 million in investment income, compared to non-operating income of $264.6 million in the prior year.
