An “unprecedented” drop in patient volumes stemming from pandemic-related shutdowns coupled with higher supply and labor costs has made Providence the latest health system to post an operating loss in 2020.
Renton, Wash.-based Providence lost $306 million on $25.7 billion in operating revenue last year, a 1.2% loss margin. The 51-hospital system’s margin was an already slim 0.9% in 2019, when the system made $214 million on $25 billion in revenue.
Providence’s 2020 revenue includes $957 million in federal stimulus grants, without which its loss would have been much higher.
The not-for-profit health system’s inpatient admissions plunged 12% year-over-year in 2020. Outpatient visits were down 8% in that time. Emergency department visits dropped 19%.
Meanwhile, the health system said it incurred significant costs responding to the pandemic. Labor costs grew 4% year-over-year, and supply expenses grew 3%, driven in part by a 9% uptick in pharmaceutical spending.
“We knew we were in for a marathon the moment we admitted our first patient with COVID-19 in January 2020,” Dr. Rod Hochman, Providence’s CEO, said in a statement. “Our caregivers have been on the front lines ever since, and we are incredibly proud and grateful for all they have done to serve our communities during this challenging time.”
Providence also posted $1 billion in non-operating gains in 2020, compared with $1.1 billion in 2019.
Providence isn’t the only health system to lose money last year. California giant Sutter Health posted a 2.4% loss margin last week.