Tuesday, March 5, 2024

Atrium forecasts operating losses, 6.7% average rate hike

Atrium Health’s Charlotte-area operations are likely to lose $75 million this year on an operating basis and post a $66 million loss in 2023, the state’s biggest health care system said Monday.

Those negative results are expected despite plans to boost rates by an average of 6.7% in 2023, Atrium said in a report. The projections show a 5% increase in operating revenue to $8.1 billion in 2023. For the first nine months this year, Atrium says its operating losses were $102 million, compared with a $303 million profit in the same period a year earlier.

Atrium balances gains or losses from its operations with investment income from its $8 billion portfolio of stock, bonds and other investments. During bull markets, that creates big windfalls, but during downturns the numbers can get pretty negative.

For the first nine months of 2022, the system’s Charlotte region had a $1.1 billion loss on its investments, compared with a $202 million gain in the same period last year. As a result, Atrium’s total loss — which includes operations and investments — was $1.14 billion, compared with a $452 million profit a year earlier.

Rates charged on hospitals are rising in concert with inflation in labor, supply, energy and other costs. “While our costs are going substantially higher, what we are paid by government contracts and other payors does not increase proportionally,” a spokesperson said.

Atrium doesn’t provide a consolidated report on all of its finances because it operates Winston-Salem-based Atrium Wake Forest Baptist Health as a separate entity. But the combined revenues of the organizations top $12 billion annually.

That revenue is likely to explode to about $27 billion pending Atrium’s combination with the Advocate Aurora Health system to be approved by regulators by the end of the year. It would create the nation’s fifth-largest U.S. health care system. Atrium CEO Gene Woods says he expects approval by the end of December.

Advocate Aurora, which is based in a Chicago suburb, is larger than Atrium with major market share there and in Wisconsin. But the combined headquarters will be in Charlotte and Woods will be co-CEO with Advocate Aurora’s Jim Skogsbergh, who plans to retire in 18 months.

Woods said that the system faces continued shortages in labor and supplies. Asked to elaborate, a spokesperson cited a lack of nurses and some pharmaceuticals. The crunch is worsening because of the current influx of respiratory illnesses that is boosting volume. Also, some professionals have left the profession after so many months of non-stop crisis care, he said.

Patient days have increased 8.4% in 2023 versus a year earlier, the system said. Total physician visits dipped 2.4% to 4.35 million.

Atrium’s board approved several changes to the system’s bylaws at Monday’s meeting related to the upcoming combo with Advocate Aurora. Woods will no longer be on the Charlotte-Mecklenburg Hospital Authority board, and Ken Haynes, who oversees the region, will be the senior Atrium executive on the board.

Atrium provides details on its operations to the media at periodic board meetings. No questions were asked during the public session of Monday’s meeting by the Atrium board, which is made up of Charlotte-area business and civic leaders.

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