Sutter Health says cost-cutting to continue as it reports $51 million second quarter loss
Sutter Health didn’t make enough money to cover its expenses in the second quarter ending June 30, falling about $51 million shy of breaking even, according to a report the company made to bondholders.
In a statement emailed to The Sacramento Bee on Tuesday, Sutter Health spokesperson Liz Madison said the company’s financial position had stabilized since it initiated a restructuring plan last year but that the quarter’s results demonstrated the need to continue cost-cutting efforts.
“Our year-to-date numbers show we still have more affordability work ahead as we strive to best position Sutter Health to serve our patients and communities into the future,” the statement continued. “We are grateful for our employees and clinicians who have worked diligently over the last several years to help bring our costs down—at the same time managing through the pandemic and continuing to provide high-quality, nationally recognized care.”
Sutter’s workforce has dropped to roughly 53,000 now from about 55,000 on Dec. 31, 2020, according to the company’s financial reports.
The company’s revenue from the all-important patient services category dropped by $74 million when compared with same period a year earlier, but Sutter realized a $69 million increase in what it collects on premiums for its health plans.
In terms of spending, Sacramento-based Sutter reported an increase of $151 million on what it spends for so-called purchased services, the fees it pays to medical providers. when compared with the year-ago period. The cost of salaries and employee benefits ticked up by $30 million.
“The organization continues to face financial headwinds like inflation and increased staffing costs, as evidenced by our near break-even operating margin,” the Sutter statement said. “Even still, we are encouraged that independent ratings agencies have recently acknowledged our efforts to date. In the second quarter, Moody’s, S&P and Fitch all affirmed the system’s existing “A” category bond ratings.”
Sutter holds a number of investments that it did not sell but which declined in value by $495 million during the quarter. The company, however, did log $56 million in investment income.
In total, Sutter’s loss on its operations and assets added up to $457 million.
The nonprofit health care giant logged a gain of $95 million from its operations in the first quarter of the year.
