Allina Health reported its largest annual operating loss on record last year, but its financial performance also improved significantly in the fourth quarter.
The Minneapolis-based health system released its year-end results this week, showing an overall loss of $317.8 million due to industry-related factors, including high labor costs and difficulties discharging patients to tiered facilities. It is said that this is due to overall issues.
However, in the fourth quarter, while revenue increased, payroll and benefit costs decreased slightly compared to the same period in 2022.
“This shows we can care for more people… [while] “We’ve gotten our expenses under control. We’re optimistic about that, but there are still headwinds,” Allina Chief Financial Officer Rick Magnuson said in an interview.
Magnuson said Minnesota continues to face challenges such as slowing population growth and an aging population. This means that more patients are covered by government-funded health insurance programs that offer relatively low reimbursement rates for medical services.
Allina Health announced in July it would cut about 350 jobs amid what the nonprofit health system called unprecedented financial pressure. Mr. Magnuson said savings from headcount reductions were a factor in the improved results in the fourth quarter.
Additionally, Alina was more successful in hiring employees near the end of the year, reducing its reliance on high-priced labor hired through temporary agencies.
Finally, the health system is adding more skilled nursing facility beds to accommodate patients who are ready to leave the hospital. In general, the lack of capacity in these tiered facilities means that patients spend more time in the hospital without the associated increase in health insurance payments.
“Allina Health will expand access to skilled nursing facilities, reduce delays in patient transportation when needed, and ultimately ensure patients receive the right level of care in the right place. “We have made a concerted effort to achieve this goal,” the health system said in a released financial report. Wednesday.
Earlier this month, S&P Global Ratings downgraded Alina’s long-term debt rating by one notch, which could result in higher future borrowing costs. The rating agency gave Alina a stable rather than a negative outlook thanks to an improved fourth quarter and a “consultant-assisted turnaround plan aimed at returning operating results to break-even in 2024.” He said he was giving.
“Management confirmed that turnaround efforts are gaining momentum,” S&P Global Ratings said in a report. “While we are positive about these efforts and the recent improvement in our operating results, we believe that the process of returning both our business and balance sheet to previous levels will likely continue for several years. ”
Allina Health is the seventh largest nonprofit group in Minnesota. It operates Abbott Northwestern Hospital in Minneapolis, United Hospital in St. Paul, and a large network of clinics and employs more than 28,000 full- and part-time employees.
During the fourth quarter, Allina posted operating income of approximately $2 million on revenue of $1.38 billion. Taking into account investment returns, the health system’s overall revenues exceeded expenses by $73.1 million.
Earlier this month, Allina announced it would hire Optum to take over its IT and billing services in a deal that includes transferring about 2,000 jobs to UnitedHealth Group’s Eden Prairie-based division.
On Tuesday, Allina announced plans to reconfigure services at Mercy Hospital of Anoka County, which consists of campuses in Coon Rapids and Fridley.
Allina said surgeries will no longer be performed at the Unity campus in Fridley, and ICU services will be concentrated in Coon Rapids. Mercy will no longer provide pediatric inpatient care, although Alina said the service has a low patient volume.
The Allina Nurses and Doctors Union says 69 of its members have lost their jobs as a result of these changes. Allina said she expects many will find jobs elsewhere in the health system.
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