PROVIDENCE – While Lifespan Corp.’s second-quarter financial report presents a downturn in operating losses compared to the first quarter of fiscal 2023, the two quarters are more similar than they appear on the surface due to a change in the health system’s classification system.
Lifespan’s most recent financial report, which details a $3.7 million operating loss in the second quarter of fiscal 2023, includes figures influenced by a new classification system that shifts investment income from operating to non-operating revenue, said Peter Markell, the health system’s executive vice president and CFO.
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Under the updated system, the first quarter’s operating finances, reported at $4.9 million in March, would appear closer to the figure reported in the second quarter, he noted
While the health system saw increases in some other revenue sources, which influenced the first quarter, “when you take that out, the actual loss in the first and second quarters were very similar to each other,” for operating expenses, Markell said.
The health system made this change to simplify a reporting process that could produce unstable results, he noted.
“Investment income is volatile,” Markell said. “It’s good one month, down the next, then up again, and we really wanted to get that volatility out of the operating statement and be consistent.”
The second quarter of the current fiscal year ran from Jan. 1 to March 31.
Trends that have long been a thorn in the side of Lifespan, and most health care systems since exacerbated by the COVID-19 pandemic, continue to drive the hospital’s major financial losses, Markell said.
Among those challenges, staffing and supply chain expenses remain as stressors on the health system.
“We still have a lot of contract labor and traveling nurses,” Markell said. “I would say the rates are coming down a little bit from their astronomical highs, so we’re seeing improvement on that. But it’s still a very high cost to pay for labor.”
Markell did not have a figure available for the number of travel nurses currently employed by Lifespan, but said that the health system has about 530 unfilled nursing positions.
In hopes of bringing contract labor expenses down, Lifespan, the state’s largest private employer, has begun offering new recruitment and retention initiatives, such as student loan repayment of up to $9,000; tuition reimbursement of up to $3,500; back-up care options for children, elders and pets; and its recently-launched Lifespan Nursing Assistant School, which provides no-cost career training to under-resourced communities.
Lifespan sees the highest turnover rates in its employees who have been there for three years or less, Markell said, noting that employees in this group tend to be more flexible on location and willing to move to higher-paying jobs in places such as the greater Boston area.
In response, Lifespan is attempting to hone benefits to “create more of a feeling of why people would want to stick with us rather than jump at the dollars” for this group of newer employees in particular, Markell said.
The health system is also considering consolidating some of its existing realty in an attempt to tip revenue in a positive direction.
“In this new hybrid and remote world, we’re looking at our space, and what’s the real level of space we need for our employees,” Markell said.
Potential consolidation would primarily mean cutting back on administrative spaces, he said, but could involve some merging of clinical practices located near each other.
Despite continuing financial troubles, Lifespan has seen significant financial improvement from the previous year. In the first quarter of fiscal 2022, the health system reported a $18.6 million operating loss.
Jacquelyn Voghel is a PBN staff writer. You may reach her at Voghel@PBN.com.
