Dive Brief:
- Growing expenses outpaced operating revenue at Trinity Health during its 2023 fiscal year ended June 30. The hospital system reported operating revenue of $21.6 billion on total expenses of $21.9 billion.
- Acquisitions for the Livonia, Michigan-based healthcare system added both $1.6 billion in revenue and $1.7 billion in operational expenses, according to the results released on Friday. The revenue gains were partially offset by the divestiture of St. Francis Medical Center in December 2022.
- Labor expenses continue to plague the hospital operator, which called contract rates “unprecedented” last year. Labor costs rose approximately 7.7% this year to $12 billion compared with $11.1 billion in the year prior. Contract labor accounted for $933 million compared with $626 million in 2022.
Dive Insight:
Trinity Health is one of the largest nonprofit, faith-based healthcare systems nationwide, with 88 hospitals operating across 26 states.
The health system’s 8.3% growth in operating revenue compared to the prior year was driven by its acquisitions of Iowa-based MercyOne, Michigan-based North Ottawa Community Health System and Genesis Health System, according to Trinity.
Excluding acquisitions and the divestiture of SFMC, operating revenue increased by $147.3 million — or less than 1% — compared to the prior year.
Trinity posted a $431 million operating loss. A nonoperating gain of $1.5 billion pushed Trinity to an excess of $959.7 million revenue over expenses.
Trinity noted an uptick in net patient service revenue of $162.6 million from increased utilization of outpatient services and improvements in payment rates. Though inpatient volumes were “stabilizing” in 2023, the system has not seen them return to pre-pandemic levels.
“The Corporation continues to diversify its business segments to shift towards ambulatory, home health, PACE, urgent care, specialty pharmacy and digital telehealth care in order to gain better position for balanced performance when individual segments are challenged,” according to Trinity’s results.
However, revenue gains were offset by continued rising expenses, which the health system attributed to continued macroeconomic pressures.
The ongoing nationwide shortage of nursing staff, reduced consumer spending and rising inflation rates, as well as the end of public health emergency funds, resulted in revenue reductions and cost increases, the system noted.
Contract labor expenses hit “unprecedented highs” for the health system in 2022. This year, Trinity’s contract labor spending increased nearly 50%. However, Trinity noted staffing MercyOne Des Moines totaled $519 million and drove most of the increase.
On a same-facility basis, contract labor costs decreased $250 million, or 40.6%, compared to the previous fiscal year.
The system expects to further decrease labor costs in 2024 as it rolls out cost-cutting efforts, including new care delivery models that utilize a three-person hybrid care team. Trinity’s TogetherTeam Virtual Connected Care, announced in September, uses on-site and virtual nursing to address staffing shortages and patient needs efficiently, according to Trinity.
