Home Industries Financial Services Brown University Health posts $44.7M operating income in 2024

Brown University Health posts $44.7M operating income in 2024

By

Katie Castellani

-

11/27/2024

Rhode-Island-Hospital — BROWN UNIVERSITY Health closed out an eventful fiscal year with a $44.7 million operating income, according to unaudited financial documents released Wednesday./COURTESY OF BROWN UNIVERSITY HEALTH /COURTESY OF BROWN UNIVERSITY HEALTH.

PROVIDENCE – Brown University Health, formerly known as Lifespan Corp., closed out an eventful fiscal year with a $44.7 million operating income, according to unaudited financial documents released Wednesday. This marks an improvement over the health system’s $8.6 million operating income last year. The 2024 result was largely boosted by $21.5 million in unusual items.

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PROVIDENCE – Brown University Health, formerly known as Lifespan Corp., closed out an eventful fiscal year with a $44.7 million operating income, according to unaudited financial documents released Wednesday. This marks an improvement over the health system’s $8.6 million operating income last year. The 2024 result was largely boosted by $21.5 million in unusual items. Without the unusual items Brown Health would have reported a $23.2 million operating income for the year. Brown Health also reported a $26.8 million operating loss for the quarter ended Sept. 30, a dramatic decrease from last year’s $6.9 million operating income. Net income for the fourth quarter was $14.8 million, compared with a $7.5 million net loss in the same period last year. Net income for the year was $148.7 million, compared with $37.1 million in 2023. Contributing to this was a 11.5% increase in patient service revenue, which rose from $2.6 billion in 2023 to $2.9 billion in 2024. Discharges also increased by 6.2%, leading to $171.4 million in additional patient service revenue. Other revenues increased 12.4% over last year, going from $316.2 million in 2023 to $355.3 million in 2024 because of a $39 million growth in retail and contract pharmacies. Brown Health did incur $42.7 million in losses associated with risk-based contracts, compared with a $17.6 million surplus in 2023. The health system’s management attributed this to continuing challenges of utilizations, rising unit costs – particularly in drug spending – and a rise in high-cost cases. Also, flat Centers for Medicare & Medicaid Services rate along with falling risk scores have led to underfunding relative to the actual patient acuity. Operating expenses rose 10.9% over last year, going from $3.1 billion in 2023 to $3.4 billion in 2024. This was mainly because of increases in compensation and benefits, supplies and other expenses as well as license fees. Compensation and benefits rose from $1.8 billion in 2023 to $2 billion in 2024. This was driven by 400 additional operating full time employees, compared with last year leading to $30.9 million in additional expenses. Supplies and other expenses increased from $834 million in 2023 to $962.4 million 2024. This was associated with a 19.7% increase in drug costs at retail and contract pharmacies. The increase in purchased services was mainly driven by $8.2 million of due diligence costs associated with acquiring Saint Anne’s and Morton Hospitals as well as Hawthorn Medical Associates. Brown Health purchased these facilities from Steward Health on Oct. 1 for approximately $175 million from Steward Health Care, which has been unloading its Massachusetts facilities after filing for Chapter 11 bankruptcy in May. Brown Health’s non operating gains rose to $104.1 million for the year, compared with $28.6 million in 2023. This was driven by increases in investment income – which grew from $52.3 million in 2023 to $115 million in 2024. Total net assets increased by $268.4 million in 2024, compared with a $132.1 million increase in 2023. This was boosted by increases in both operating and investment incomes. Cash and cash equivalents rose from $96.7 million in 2023 to $165.8 million in 2024. Other receivables increased from $58.8 million in 2023 to $124.7 million in 2024. Assets limited to use also rose from $1.5 billion in 2023 to just under $2 billion in 2024, largely because of the issuance of the Brown Health Obligated Series 2024 Bond. Brown Health’s management said volume levels in 2024 were consistent with 2024. Occupancy rates rose from 86.5% in 2023 to 88.6% in 2024. Brown Health and Lifespan Corp. entered into an Amended and Restated Academic Agreement with Brown University effective June 27. The agreement changed the health system’s name and designates Brown’s Warren Alpert Medical School as Brown Health’s principal clinical affiliate. Under the agreement, Brown University will make annual contributions to Brown Health ranging from $10,000 to $25,000 through July 1, 2030. Also, Brown Health will provide the medical school with $15,000 beginning 2031, along with other funding to the university. In 2024 Brown University contributed $10,000 to the health system, which was recognized as a contribution in non-operating income and Brown Health paid $1,353, which is recorded in supplies and other operating expenses. Along with this, Brown Health announced it was laying off 20% of its executive staff on Sept. 20. CEO John Fernandez said the cuts will save the health system $6 million in fiscal year 2025, which began Oct. 1. A spokesperson for Brown Health did not immediately respond to PBN’s request for comment Wednesday. Katie Castellani is a PBN staff writer. You may contact her at Castellani@PBN.com.