Providence Health posted a net operating loss of $311 million for the third quarter of the year as expenses for labor and other costs soared and reimbursement didn’t keep up.
The 52-hospital system announced Monday that it generated $20.2 billion in operating revenue for the first nine months of the year, a 7% bump compared to the same period in 2020. But operating expenses soared to $20.6 billion, an increase of 8%.
The system also experienced major strain in the third quarter of the year due to a surge of COVID-19 caused by the highly transmissible delta variant.
“With the Delta variant spreading through our communities and large segments of the population still unvaccinated in Q3, we experienced volumes that tested the limits of many parts of our health system,” said Providence Chief Financial Officer Greg Hoffman in a statement. “Yet, we were able to respond to the needs thanks to the dedication of every caregiver across the Providence family of organizations.”
Providence has been slammed not just by higher COVID-19 volumes but also by a massive labor shortage.
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The system had a 10% increase in salaries and benefits due to higher wages and increased costs for temporary staff and overtime. Providence also saw supply expenses increase by 11% compared to the third quarter of 2020; this was driven by a 17% hike in drug spending an 8% increase in supply costs. The hikes were offset, however, by a 5% decline in nonmedical supply costs.
“Providence absorbed the increased cost of responding to the pandemic even as reimbursement did not keep up,” according to a release on the earnings. “This led to a net operating loss of $311 million for the quarter ending Sept. 30, 2021, bringing the net operating loss for the first nine months of the year to $405 million.”
For the third quarter, the company generated $6.38 billion in operating revenues.
The system’s volume’s increased by 8% for the quarter compared to the same period in 2020 due in part to patients who had care delayed coming back.
“We saw significant increases in volumes, across our key volume indicators as emergency room visits increased 18%, acute admissions increased 5% and outpatient visits increased 3% compared with the same period in 2020,” the system said.
Providence is not alone in facing declines in the third quarter due to the surge of COVID-19. Universal Health Services generated $218 million in net income for the third quarter compared to $214 million it reported during the same time last year.
Kaiser Permanente’s profits also dropped to $1.6 billion in the quarter, down by nearly half compared to the $3 billion it generated in the second quarter.