Trinity Health touted “significant improvements” across fiscal-year 2024 operations which, prior to asset impairment charges, returned to the black and fueled a 48% year-over-year rise in cash flow.
The major nonprofit system reported operating income before other items of $66 million (0.3% operating margin before other items) and $1.2 billion in operating cash flow before other items during the 12-month period ended June 30. A year prior, those lines came in at a $288 million operating loss (1.3% operating margin) and $832.7 million.
“Improvements were attained in payment rates, same facility patient care volume growth and several revenue and cost management initiatives that improved operations,” Trinity’s management wrote in a summary of the fiscal year’s numbers. “These improvements were partially offset by unfavorable service and payer mix shifts.”
The “other items” Trinity management’s set aside in its top-line numbers are $134.4 million asset impairment charges during the fiscal 2024 year, about two-thirds of which were tied to two acute care facilities where “the carrying value of the long-lived assets were not recoverable from estimated future cash flows.” The system indicated that reduced volumes, shifting demographics and rising operating expenses were responsible.
But, despite running a more efficient business, Trinity’s bottom line was cut in half from fiscal 2023’s $959.7 million to this year’s $475.5 million, largely due to the difference in nonoperating items.
Per the system’s filings, operating revenue grew 10.5% to $23.9 billion. About half of the year-to-year growth was tied to a series of recent acquisitions, leaving Trinity with a 6.2% operating revenue increase when setting aside those and a separate divestiture.
Same-store net patient service revenue (excluding a 340B settlement and Medicaid provider tax program changes) grew 4.6%, thanks to higher pay rates, case mix and volumes. The latter of these, as measured by case mix adjusted equivalent discharges, rose 0.2% year over year.
Total operating expenses rose 8.8% to $23.8 billion, or by 5.1% when setting aside the portfolio changes. Total operating costs per case rose 3.6% over the prior year “as the corporation continues to tightly manage operating costs amid inflation,” management wrote.
Same-facility salaries and wages rose 6.2%—a reflection of industrywide staffing shortages and wage inflation—while same-facility supply costs rose 6.6%. Though same-facility purchased services and medical claims were also up, management highlighted a 25.5% cut in contract labor spending thanks to a combination of internal staffing agency investments and a virtual care model.
Trinity—which according to its website owned, managed or jointly ran 101 hospitals across 27 states last year—grew its days of cash on hand to 238 from last year’s 178.
The upward trajectory is in line with recent reports from Trinity’s large Catholic peers, many of which are still logging large losses.
In late September, CommonSpirit Health outlined a $400 million improvement in its adjusted operating income, though it still logged an $875 million operating loss (-2.4% operating margin). Ascension had narrowed its loss from recurring operations down to $79 million (-0.3% recurring operating margin) across 10 months before a major cybersecurity attack threw it off course. Providence is up $53 million (0.3% operating margin) as of August’s half-year check-in, a major turnaround over prior years of major losses.