Sutter Health nets profit in third quarter, as investment income covers operating loss
Sutter Health reported a profit in its most recent quarterly statement, but that was largely as a result of growth in its investments rather than in its operations as leaders of the hospital giant said they continue to grapple with costs associated with the new coronavirus pandemic.
In filings last week to bond issuers, Sutter reported it had a financial income of $240 million for the third quarter that ended Sept. 30, compared with a loss of $671 million in the same period last year.
That profit was achieved with help from rebounding investment income. According to the financial statements, Sutter reported a loss from operations of $48 million, but gained $288 million in investment income.
The nonprofit health care giant’s prior quarterly losses have cast a long shadow, with Sutter reporting losses of $564 million for the first nine months of the 2020 fiscal year. It had a loss of $185 million for the comparable period in 2019.
In a prepared statement, Sutter said: “Adjusting our entire integrated network to rapidly respond to COVID-19 continues to be incredibly challenging and costly. ... While we have seen some patient volumes rebound, fighting COVID-19 requires extensive resource investments and unprecedented coordination between state and local officials and integrated health systems like ours.”
Sutter officials also warned that “there are still many unknowns, including the duration of the COVID-19 pandemic and its impact on our operations as we continue to address a negative operating margin.”
They also noted that their system had begun seeing changes to its payer mix and increasing labor, technology and facilities costs prior to the new coronavirus pandemic, and those challenges have been heightened amid recent events. Sutter and other health-care systems in the California Hospital Association requested financial assistance from the state of California but have not received it.
Sutter had seen returns on its investment income wane earlier this year amid a broad market downturn, reporting unrealized net losses of $94 million for the nine months ended Sept. 30, but a market rally in the quarter raised its fortunes.
Investment income provides a further cushion when hospital providers do not have enough cash reserves to cover losses. The company reported liquid investments, equity securities and fixed income securities worth $7.2 billion.
This story was originally published November 24, 2020 at 1:33 PM.
