The Catholic nonprofit managed to slash its operating loss by nearly $400 million for fiscal year 2024.
CommonSpirit Health's finances are heading in the right direction, but continue to be inhibited by challenges with payers, the health system said in its fiscal year 2024 earnings report.
Higher patient volume and reduced expenses allowed the Chicago-based nonprofit to trim its operating loss year over year, while claim denials and payment delays kept its bottom line from looking even better.
For the fiscal year that ended June 30, CommonSpirit reported an operating loss of $875 million, a marked improvement from the $1.2 billion loss suffered in the previous year. The system's excess revenue over expenses as adjusted was $503 million, compared to a $82 million net loss for 2023.
Revenue increased 8.2% year over year to $37 billion as expenses jumped 7% to $37.8 billion. Volume growth drove much of the revenue, with the system experiencing improvements in adjusted admissions (6.6%), acute admissions (6.4%), acute inpatient days (2.5%), adjusted patient days (2.4%), outpatient visits (6.9%), and emergency department visits (4%).
However, CommonSpirit pointed to difficulties with payers for holding back greater improvement.
"CommonSpirit's modest revenue increases were offset by continued challenges with payers on denials and timely payment," the system said. "CommonSpirit has taken a firm stance on contract renewals so payers absorb a share of inflation, and processes and terms are improved to ensure providers get paid for the care they deliver."
Denials have been a constant source of frustration for providers. In a recent survey conducted by Experian, more than 75% of revenue cycle management executives said denials are increasing, compared to 42% in 2022.
As hospitals and health systems attempt to push care to lower acuity settings, CommonSpirit also highlighted its ambulatory care expansion, with nearly 60 sites added in the past year.
Jay Asser is the CEO editor for HealthLeaders.
KEY TAKEAWAYS
CommonSpirit's fiscal year 2024 earnings showed significant improvement despite denials and reimbursement delays offsetting volume growth and reduced labor costs.
After reporting an operating loss of $1.2 billion in the prior year, the hospital operator brought its losses down to $875 million for 2024.