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Ascension, one of the largest health systems in the US by number of hospitals and net patient revenue, had a hard fiscal 2023, reporting a nearly $2.7 billion net loss in earnings, released September 13.
The St. Louis-based nonprofit system blamed the pandemic, reimbursement rates, and “broader inflationary and recessionary pressures” for the loss. Ascension also reported a “one-time, noncash” $1.5 billion impairment loss during the fiscal year, which ended June 30.
“These disruptions have contributed to higher operating costs coupled with revenue challenges, especially in the first half of the fiscal year,” the health system said in a statement.
The health system—which has 139 hospitals and reported $25.6 billion in net patient revenue in FY23—had 211 days of cash on hand as of June 30, compared to 259 at the end of the 2022 fiscal year. The system reported a $1.8 billion net loss for FY22.
Ascension said in a statement that it has implemented “significant improvement plans” focused on containing expense growth, but those plans have yet to offset the inflationary pressures that the overall healthcare industry is facing.
Liz Foshage, Ascension’s EVP and CFO, said in a statement that “the American healthcare system is experiencing unprecedented operational and financial challenges, and Ascension is no exception to these larger trends.”
“The aftereffects of the Covid-19 pandemic, continued healthcare worker staffing shortages, ongoing supply chain challenges, and persistent inflation were headwinds we faced throughout the last fiscal year,” she added.
Ascension management said in a memo that they have seen “measured improvement” of patient volumes in both the inpatient and outpatient settings compared to FY22, but the “reduction in Covid funding negatively impacted revenue in the current year.”
“Additionally, challenges to expenses continue to persist resulting from the inflationary environment,” the health system management wrote.
Ascension isn’t the only major health system facing such challenges. The Mayo Clinic in Rochester, Minnesota, and Providence in Renton, Washington, have also reported that their patient volumes are improving, but their costs are rising due to inflation, Healthcare Dive reported.
Ascension’s investment arm, Ascension Investment Management, however, had a solid year, reporting $423 million in net investment return.
“Despite this challenging operating environment, Ascension remains committed to our mission and responding to the needs of the communities we serve,” Foshage said. “As we look forward to the next fiscal year, many of these headwinds remain, but our team is prepared to adapt to this new normal and chart a path back to operational stability.”