The nonprofit health system bounced back in a major way from the previous quarter to start the fiscal year on a positive note.
After seeing its finances plummet due to a significant cyberattack suffered in May, Ascension has started to turn around its bottom line.
The hospital operator kicked off fiscal year 2025 with a $197 million loss from recurring operations, marking a $1.2 billion improvement from the last quarter as recovery from the cyberattack continued and patient volume steadily grew.
Ascension's first 10 months of fiscal year 2024 showed promise, but the ransomware attack wreaked havoc on the final quarter, resulting in a $1.4 billion recurring operating loss in Q4.
One of the most notable effects of the attack was on same facility patient volume, which dropped between 8% to 12% on average year over year in May and June.
In Q1 FY2025, same facility volumes returned to within 1.5% of the volumes from the previous year, while same facility net patient service revenue increased 2.4% alongside same facility operating expenses jumping 2.6%.
The St. Louis-based system "continues to expand capacity and backfill certain volumes that have shifted to the outpatient setting as well as improve access, including any areas impacted by the cybersecurity attack," Ascension stated in its release.
"This quarter's financial results mark a pivotal step forward, illustrating the effectiveness of our focused economic improvement strategies," Saurabh Tripathi, Ascension executive vice president and CFO, said in a statement. "An uplift in recurring operating performance reflects our commitment to disciplined financial management, carefully balanced between growth and efficiency. Despite ongoing challenges, including the continuing recovery from May's cybersecurity attack, we are solidifying our operational foundation to support stability and future investments."
Ascension's net income for Q1 was $387 million, compared to a net loss of $597.6 million over the same period last year.
In addition to several divestitures the system has recently made, Ascension also entered a joint venture with Henry Ford Health System. The partnership, which launched on October 1, allows Ascension to extend its footprint in Michigan.
Leaders have been forced to make cybersecurity a priority after several attacks plagued healthcare this year.
Shoring up cybersecurity became a necessity for healthcare organizations this year as several attacks highlighted vulnerabilities.
While other pain points such as the workforce continue to keep CEOs up at night, cybersecurity has come to the fore and forced leaders to rethink the number of resources they're putting into keeping their and their patients' data safe.
Here are four cybersecurity trends HealthLeaders highlighted this year that grabbed the attention of CEOs.
Change Healthcare attack fuels 'year of chaos'
The tone of the year was set in many ways by the Change Healthcare cyberattack that occurred in February.
It was called "the most significant cyberattack on the U.S. healthcare system in American history" and had far-reaching consequences. A survey of nearly 1,000 hospitals by the AHA at the time found that 94% of hospitals reported financial impact, with more than half reporting "significant or serious" impact.
“Cybersecurity issues are just added icing on the cake,” said Aspirus Health CEO Matt Heywood, who coined 2024 as "the year of chaos."
After Change Healthcare, more chaos ensued as other major organizations were hit by cyberattacks in the following months, including Kaiser Permanente and Ascension.
If CEOs weren't taking cybersecurity seriously enough before, 2024 was a harsh reminder of why they should ensure that their systems are protected.
Lack of response plans
In the wake of suffering a cyberattack, it's vital that organizations have a response plan in place to mitigate the damaging effects.
However, only 63% of companies have such a plan, according to a survey by Software Advice, which fielded answers from 296 respondents with IT management, data security, data management, security training or audit responsibilities at healthcare organizations.
While preventative measures are needed, a response plan "that includes defined roles and responsibilities, communication protocols, and a prioritization list" can reduce downtime and further loss of data in the aftermath, the report stated.
Investment ramping up
The good news is that many organizations have recently recognized the importance of increasing their cybersecurity investments.
A survey of 150 providers and payers by Bain & Company and KLAS revealed that 75% of respondents reported upping their IT investments over the past year, with an emphasis on addressing cybersecurity.
In response to the Change Healthcare attack, 56% of payers and 38% of providers increased cybersecurity software spending, with only 11% of providers and 8% of payers choosing not to act.
More than a third of providers (38%) chose investment in IT infrastructure and services, including cybersecurity, as a top three priority most often.
Those figures could potentially rise in 2025 as more cyberattacks continue to heighten CEO awareness.
Longer recovery times
Not only are ransomware attacks in healthcare increasing, but their recovery times are also getting longer.
This year, ransomware attacks in healthcare reached a four-year high since 2021, with 67% of organizations saying they were impacted, according to a survey by Sophos. In 2021, the security solutions firm found that 34% of companies were affected.
Meanwhile, fully recovering in a week or less was only possible for 22% of organizations this year, compared to 47% in 2023 and 54% in 2022. More than a month to recover was necessary for 37% of respondents, a jump from 28% in 2023.
Due to longer recovery times, companies are losing more money from cyberattacks. Organizations reported a mean cost of $2.57 million to recover from a ransomware incident, more than doubling the cost of $1.27 million from 2021.
“It's incumbent on all CEOs in healthcare and other industries to be vigilant on this front, to make sure that there are tons of people in place managing that vigilance on a day-to-day basis, and that function is appropriately resourced,” Cedars-Sinai CEO Peter Slavin said. “All organizations just need to do their best to try to prevent such a catastrophe from happening.”
A new report reveals the benefits of integrating with larger health systems for struggling rural facilities.
One tried-and-tested approach to keeping rural hospitals open and preserving access to care in those communities is integration with health systems.
While it may not be right choice for all rural hospitals, facilities that are vulnerable can greatly improve their financial viability and sustainability by affiliating with, merging with, or being acquired by a larger hospital operator, according to a new report.
The analysis, which was conducted by consulting firm Dobson DaVanzo & Associates and commissioned by the Coalition to Strengthen America's Healthcare, examined research on the economic state of rural hospitals, Medicare cost reports, AHA Annual Survey data, and interviews with stakeholders.
Many rural hospitals have succumbed to financial pressures, the report found, with 110 closures occurring between 2011 and 2021. More than half (55%) of those closures were of standalone hospitals.
Meanwhile, 45% of the hospitals that were at high risk before a merger, acquisition, or affiliation with a larger system between the same period experienced financial improvement after integrating. The average total margins of rural hospitals post-merger jumped from 1.8% to 2.2%, and for facilities post-affiliation that figure climbed from 1.5% to 2.3%.
One in three hospitals that were at high risk of closure were no longer high-risk after merger or being acquired, whereas two in three hospitals that were at high risk of closure were no longer high-risk following affiliation, the report stated.
Aside from the financial benefits, integration can also serve rural hospitals operationally.
"Additionally, rural hospitals that align themselves with a hospital system can benefit from the management processes, organizational structures, telehealth capabilities, and technological innovation available at other system hospitals," the report said.
The importance of M&A for rural hospitals right now can't be overstated, with more closures likely on the way. According to recent analysis by the Center for Healthcare Quality and Payment Reform, more than 700 facilities, or 30% of all rural hospitals in the U.S., are facing closure, including 360 being at immediate risk.
Low reimbursement from payers is the number one factor creating financial turbulence for these hospitals, putting stress on CEOs to find solutions for keeping their doors open.
The buyer, WoodBridge Healthcare, was unable to finance the purchase of Commonwealth Health System.
Community Health Systems has been an eager seller this year, but roadblocks continue to block the hospital operator's path to divestitures.
In the latest hang-up, CHS and WoodBridge Healthcare have mutually agreed to terminate their agreement for the sale of three-hospital Commonwealth Health System due to a lack of funding to complete the deal.
Ziegler, the investment banking firm WoodBridge retained for the transaction, was unable to sell the bonds required to fund the acquisition, the nonprofit health system saidin a release.
The sale, which was announced in July for $120 million and expected to close in the fourth quarter, involved three Pennsylvania hospitals: 186-bed Regional Hospital of Scranton, 122-bed Moses Taylor Hospital in Scranton, and 369-bed Wilkes-Barre General Hospital in Wilkes-Barre.
“The entire WoodBridge team is extremely disappointed in this outcome,” Joshua Nemzoff, WoodBridge chairman of the board, said in a statement. “We very much looked forward to being part of the Scranton and Wilkes-Barre communities and partnering with the Commonwealth Health staff and physicians on providing the best healthcare in the region. CHS has gone out of its way to help get this deal done including significant concessions on their part. We appreciate all their efforts to do so.”
In the wake of the transaction falling apart, Franklin, Tennessee-based CHS said it will evaluate further options for Commonwealth Health.
The move was meant to be part of the for-profit system's plan to yield more than $1 billion in divestitures to boost its finances.
It's also the second deal that has come undone in recent months, with the first being the sale of two North Carolina hospitals to Novant Health for $320 million. That transaction faced regulatory pushback before Novant eventually called off the acquisition after the Federal Trade Commission was granted an emergency injunction to block the deal.
However, CHS has continued to be active in the market and inked more agreements to sell off assets.
Last month, the operator announced a $265 million deal with AdventHealth for Florida-based ShorePoint Health System, expected to close in the first quarter of next year.
More completed divestitures should offer CHS some relief as it works its way out of financial instability.
In the third quarter, the system reported an operating loss of $205 million and a net loss of $391 million, a sharp decline from the $173 million in operating income and $91 million net loss over the same period last year, respectively.
Higher patient volumes have been essential to the nonprofit's improving finances, but they're also leading to more expenses.
Providence suffered its first negative operating quarter of the year for the three months ended Sept. 30, slowing down the momentum from its financial turnaround in the first half of 2024.
The Renton, Washington-based health system posted an operating loss of $208 million in the third quarter, marred by a jump in labor and supply costs as a result of an increase in patient volume.
While the operating loss was an improvement on the $310 million loss (-4.3% margin) during the same period last year, it was a significant downturn from the $53 million in operating income reported in the second quarter.
Providence also generated $176 million in operating income in the first quarter, which was indicative of the nonprofit steering out of the red and gaining financial stability.
Though higher admission volumes boosted revenue to the tune of a 5.7% increase to $7.6 billion in the third quarter, they also pushed operating expenses up 4% to $7.8 billion.
Salaries and benefits rose 4% year over year, whereas supplies ballooned by 8% over the same period, due in large part to a 12% increase in pharmaceutical costs.
Providence pointed to positive trends in patient volume, reimbursement, lengths of stay, and dependency on contract labor as reasons for optimism going forward.
“While macroeconomic pressures persist, including the national shortage of health care personnel and the rising cost of drugs and supplies, Providence has stayed the course on our renew and recover strategies, and as a result, our operating performance continues to improve in many of our local markets," Providence CFO Greg Hoffman said in a statement.
Within patient volume for the third quarter, inpatient admissions and case mix adjusted admissions both increased by 4% year over year, while acute adjusted admissions increased 5%, physician visits increased 4%, and home health visits increased 2%.
Through the first nine months of the year, Providence experienced an operating loss of $155 million and a net income of $310 million, compared to losses of $857 million and $613 million over the same period last year, respectively.
A variety of moves in the past 12 months, both completed and unresolved, shaped the market and set the tone for dealmaking in 2025.
The hospital M&A market experienced a bit of a push-pull effect this year with increasing financial pressures motivating organizations to pursue transactions while ramped-up regulatory scrutiny created a more challenging environment to complete deals.
Activity is expected to be robust in 2025 as health systems continue to realign portfolios, turn to partnerships to help shoulder financial burden, and explore non-traditional, multi-organizational ventures.
Here's a look back at five deals involving hospitals and health systems that defined M&A this year.
Steward Health Care
It's impossible to tell the story of 2024 dealmaking without mentioning Steward Health Care's impact on the market.
The Dallas-based system filed for Chapter 11 bankruptcy and put all 31 of its U.S. hospitals up for sale in May, which led to a number of transactions taking place over the course of the year.
In the third quarter alone, Steward was involved in 11 of the 27 hospital M&A deals in the industry, according to a report by Kaufman Hall, including multiple facilities in Massachusetts switching hands.
General Catalyst and Summa Health
The year started with a big swing by General Catalyst, which made good on its promise to buy a health system by tabbing Summa Health for its business spinoff Health Assurance Transformation Corporation (HATCo).
The venture's stated goal of transforming healthcare by testing and implementing new technology was met with some skepticism within the industry, but Summa Health CEO Cliff Deveny and HATCo CEO Marc Harrison believe the partnership is a worthwhile attempt at pushing the bounds.
"We can't keep merging inefficient health systems into other health systems because then the problems just get compounded," Deveny told HealthLeaders.Top of Form
Risant Health and Cone Health
After completing its purchase of Geisinger Health, Risant Health once again dipped into the market by signing on to add Greensboro, North Carolina-based Cone Health to its value-based care network.
Kaiser Permanente's subsidiary said it was looking to acquire "four to five" more systems over the next half-decade following the Geisinger sale and with Cone, Risant can enter a new market while also operating a health plan.
Risant's next health system acquisition, which could come in 2025, is expected to have similar characteristics as Geisinger and Cone.
Longitude Health
One of the ventures that raised eyebrows this year was the formation of four nonprofit health systems to create a for-profit entity in Longitude Health.
Baylor Scott & White Health, Memorial Hermann Health System, Novant Health, and Providence are teaming up to pool their resources and launch operating companies, initially focused on pharmaceutical development, care coordination, and billing.
While those three areas are in need of solutions, they're also filled with players that will provide stiff competition, according to Josh Berlin, CEO of strategic healthcare advisors rule of three.
Yale New Haven and Prospect
The seemingly never-ending saga between Yale New Haven Health and Prospect Medical Holdings is a prime example of how a deal can go sour after an agreement is reached.
After Yale New Haven agreed to buy three Connecticut hospitals from Prospect for $435 million in 2022, the two sides have been locked in a dispute over the conditions of the transaction that continues to play out in the public and in court.
If the parties can't meet in the middle to complete the deal soon, it could have negative effects on their strategic maneuverability, and more importantly, patient care.
Providers need to understand what millennials and Gen Z are looking for from their workplace experience.
As healthcare's workforce changes, so too must hospital CEOs' approach to recruiting and retaining the clinical and non-clinical staff of tomorrow.
This month's HealthLeaders cover story explored the generational differences that are putting pressure on decision-makers to meet the needs of a diverse workforce.
Here are three tips to meeting those demands, especially of the youngest generations, from Crouse Health CEO and HealthLeaders Exchange member Seth Kronenberg, AdventHealth CEO Terry Shaw, and University Health CEO Ed Banos.
The HealthLeaders Exchange is an executive community for sharing ideas, solutions, and insights. Our exchange program hosts a CEO Exchange annually.
The company said its financial turmoil partly stems from Steward Health Care's own troubles.
The list of healthcare provider bankruptcies this year has now grown to include Miami-based CareMax.
A combination of factors, including increasing expenses and its relationship with Steward Health Care, led the organization to file for Chapter 11 bankruptcy, according to a filing with the U.S. Bankruptcy Court for the Northern District of Texas.
CareMax, which serves approximately 260,000 patients annually and employs around 1,100 employees across 46 clinical centers, listed debts of $693 million and assets of $390 million in the filing.
In the lead-up to bankruptcy, the company suffered a net loss of $683.3 million for 2023 before experiencing a loss of $170.6 million in its most recent earnings report for the second quarter.
As part of its restructuring process, CareMax will sell the Medicare Shared Savings Program portion of its management services organization to Revere Medical, formerly known as Rural Health Group and backed by private equity firm Kinderhook Industries.
Revere Medical also finalized the acquisition of Steward’s physician group, Stewardship Health, last month, signaling its interest in distressed assets.
Steward’s own bankruptcy influenced CareMax’s financial downturn, the company’s chief restructuring officer, Paul Rundell, outlined in the filing.
After acquiring Steward’s Medicare value-based care business in 2022, CareMax served as the exclusive value-based management services organization across Steward’s Medicare network. However, Steward filed a motion to reject its business relationship with CareMax this summer when it filed for chapter 11 bankruptcy.
Beyond Steward, CareMax struggled with swelling costs from leases, rising interest rates, changes in regulatory reimbursement, inflation, rising labor and operational costs, and high levels of medical utilization following the pandemic.
“This confluence of economic factors constrained CareMax’s ability to raise new capital as a crucial moment for the newly expanded enterprise, which left the Company with limited options to address its funded debt obligations,” Rundell said in the filing.
Several providers have felt the weight of the current financial climate and entered bankruptcy recently. CareMax competitor Cano Health filed in February after the Miami-based provider had difficulty generating profit from its Medicare Advantage business.
A recent report by Gibbins Advisors, however, showed that healthcare bankruptcies are in decline overall. Through the first six months of this year, the report tracked 29 filed bankruptcies, which followed 79 cases in total for 2023.
The drop in volume is driven by fewer cases involving middle-market companies with liabilities ranging from $10 million to $100 million, Gibbins stated.
It's incumbent on hospital leaders to address the concerns of all their employees to ensure a sustainable workforce.
For hospital and health systems CEOs, recruitment and retention efforts with the current workforce require more than a one-size-fits-all approach.
As many as five generations make up clinical and non-clinical staff at organizations, putting the onus on decision-makers to understand the various factors that are driving workers to switch jobs or exit the industry.
The youngest generation could see the biggest exodus in the near future, with 22% of Gen Z (ages 18-27) reporting they plan to leave healthcare within the next three years, according to a report by Soliant Health.
The number one reason Gen Z cited for departing healthcare is an unhealthy workplace environment and culture (14.1%), which was also the leading cause for surveyed workers ages 44-59 (20.6%) and 60-plus (23.7%).
High levels of job stress or burnout were other significant drivers for ages 44-59 and 60-plus, at 19.9% and 19.1% respectively, but less of a concern for Gen Z (9.4%).
Meanwhile, ages 28-43 cited high levels of job stress or burnout as their main issue (19.1%), followed closely by poor work-life balance (17%).
When it comes to reasons for choosing a job, salary and benefits were top of the list for all generations, with ages 44-59 (25.3%) and 60-plus (25.5%) ranking them highest.
Work-life balance was most important to ages 28-43 (21%), while career advancement opportunities were more relevant for ages 18-27 (15.9%).
One area that the youngest generation showed significantly more interest in was technology and tools available for the job, which, at 7.3%, was at least more than double any other age group.
The different preferences and motivators among generations means organizations need to expand their offerings to appeal to as many people in their workforce as possible.
Check out this month’s HealthLeaders cover story to learn how hospitals CEOs are fighting the multigenerational war within their own walls.
CEOs should prioritize an area that workers say is their top concern yet doesn't receive enough attention.
It’s not a secret that improving your workers’ wellbeing gives you a better chance at keeping them. However, there’s a disconnect between the type of wellbeing that employers are providing and the kind employees want more of.
Financial wellbeing was identified as the priority for workers surveyed by global advisory, broking, and solutions company WTW, despite it being the most underserved area by employers, highlighting the need for organizations to rethink the benefits they offer.
WTW fielded responses from 535 U.S. employees working at medium and large private sector companies in various industries from March to April 2024.
While two-thirds of workers (66%) said financial wellbeing is their top concern, it ranked the lowest for employer priorities (23%). More employers are focused on supporting mental (73%) and physical wellbeing (50%), which also matter to employees, but not nearly as much as financial wellbeing initiatives.
Nearly half of employees (48%) deal with moderate or major issues in at least two areas of their wellbeing and 41% report that their financial situation is the area of wellbeing they face the biggest challenges, according to a separate WTW survey on global benefits attitudes. By addressing what workers are seeking with their wellbeing, organizations can combat burnout and increase engagement, resulting in higher retention rates.
Some of the ways surveyed employers are striving to improve employee financial wellbeing are:
Offering navigation and decision support to help maximize programs in place
Offering coaching to help build financial resilience skills
Educating employees on the various financial issues they may face
Offering personalized financial decision support
Addressing affordability through a total reward lens, looking at health, risk and retirement benefits, as well as pay, and connecting their strategy to DEI goals
Though CEOs need to make up ground on financial wellbeing, many organizations are beginning to recognize the importance of the employee experience as an outcome of wellbeing strategy. More than a third of surveyed employers (37%) said they are looking to make wellbeing a foundational element of their human capital strategy in the next three years, compared with just 11% currently.
How wellbeing initiatives are communicated and linked to company culture can also be determining factors for success, which is why employers should continue to evaluate if they’re meeting the diverse needs of their workers and reaching as many employees as possible.
