Sacramento, California-based Sutter Health saw $88 million in operating income (2.3% operating margin) and a bottom-line gain of $194 million during the first quarter ended March 31, according to a Thursday financial filing.
It’s a somewhat steadier start to the year than the nonprofit saw in the first quarter of 2022, when it had reported a slightly stronger $95 million operating income (2.7% operating margin) but a $184 million net loss. The latter sum had been weighed down by shifting investment valuations and the $208 million disaffiliation of Samuel Merritt University.
Total operating revenues increased 7.5% year over year to $3.8 billion and included $128 million in COVID-19 reimbursement from the Federal Emergency Management Agency.
Patient service revenues also rose 7.9% year over year to $3.2 billion, which system management wrote was “primarily due to increased patient volumes.” The quarter’s roughly 46,700 total admissions were a slight bump over 2022’s quarterly average of about 45,150.
Operating expenses for the quarter increased 7.9% year over year to $3.7 billion. Much of the jump was fueled by a 12.5% jump in purchased service expenses due to contract labor needs, management wrote, though pricing pressures and wage inflation trends also drove respective 7.5% and 5.9% year-over-year increases.
Across nonoperating items, Sutter logged $19 million in investment income, a $82 million change in net unrealized gains and losses on investments and $31 million from other components of net periodic post-retirement cost. The collective $132 million in net nonoperating income was a turnaround from the prior year’s $261 million net nonoperating loss.
Sutter saw its cash and cash equivalents rise $126 million from $514 million to $640 million over the course of the quarter.
Sutter employs roughly 52,000 people (33,000 full-time) across 23 hospitals, 33 ambulatory surgery centers and other care locations.
Across 2022, the Northern California system reported a $278 million operating income but a $249 million net loss, a mixed performance that still had the system in a stronger place than several of its large nonprofit peers. Leadership said at the time that the stable operations would support reinvestment into expanded patient access, workforce recruitment and cost mitigation.
Of note, in April Sutter named Dominic Nakis as its temporary senior vice president and chief financial officer. The system said it tapped the Advocate Aurora Health vet for a 12- to 18-month stint as it seeks someone to fill the role more permanently.
The uptick in patient volumes reflects similar trends reported during for-profit health systems like HCA Healthcare and Tenet Healthcare’s recent first-quarter earnings calls.