Sutter Health logs third-quarter operating profit of $104M as pandemic restrictions lift
While Sutter Health still faces challenges, company leaders said, the health care giant logged operating income of $104 million in the third quarter ending Sept. 30, up from a loss of $45 million in the same period one year earlier.
“At the beginning of this year, we started to look at ways to change the organization to help us better serve our communities and provide access to affordable, high-quality care for years to come,” said Jonathan Ma, Sutter’s vice president of finance and treasurer. “We’d like to thank our staff and clinicians for their hard work so far this year, which has helped to improve Sutter’s financial condition that will allow us to reinvest back into our communities and plan for the future. We know there is still more work ahead.”
Sutter is in the midst of a cost-cutting effort that has it evaluating the effectiveness and profitability of some units, and the company has laid off some employees.
Many patients also began returning for screenings, elective surgeries and other types of care that had been suspended amid the pandemic, allowing Sacramento-based Sutter to book revenue of $3.6 billion in the third quarter.
In a news release, Ma noted that one challenge facing the company is the continuing high cost of labor in Northern California. Those costs make up about half of Sutter’s $3.5 billion operating expenses.
The company did, however, attain a positive operating margin, Ma noted, and it did so while holding rate increases to less than 3% for the health plans with which it contracts.
Ma said Sutter is on track to meet or exceed its goal of a break-even budget.
The company also saw gains in other areas such as investment income during the quarter, boosted its overall income to $149 million.
Sutter has received a number of grants, loans and advance payments as part of U.S. government efforts to assist health care providers with weathering the impact of the COVID-19 pandemic.
Through Sept. 30, 2021, it received roughly $855 million in COVID-19 Relief Funds from the Department of Health & Human Services, Ma noted in the company financial report, and he expects that the company will comply with conditions that allow for forgiveness from repaying this subsidy.
The U.S. Centers for Medicare and Medicaid Services doled out advanced or accelerated disbursements to providers that serve Americans who receive medical coverage through those programs. Sutter got $999 million as part of that effort — and reported in its financial statement that CMS had recouped $232 million by Sept. 30 and that the remainder would be reconciled and repaid as offsets from future services by the end of fiscal 2022.
It was the second consecutive quarter of positive financial news for the company’s operations for the nonprofit health care giant. In the first quarter, the company had a net loss on operations but achieved an overall profit as a result of investment gains.
This story was originally published November 9, 2021 at 5:32 PM.
