Home Industries Health Services Lifespan posts $11.5M operating income in Q3

Lifespan posts $11.5M operating income in Q3

By

Katie Castellani

-

08/29/2024

RI-Hospital-1-696x385-1 — THOUGH LIFESPAN CORP. has fallen behind on its fiscal targets for the year, the health system posted an operating income of $11.5 million for the third quarter of 2024 ending June 30, according to unaudited financial documents released Wednesday./COURTESY OF LIFESPAN CORP.

PROVIDENCE – Though Lifespan Corp. has fallen behind on its fiscal targets for the year, the health system posted an operating income of $11.5 million for the third quarter of fiscal 2024 ending June 30, according to unaudited financial documents released Wednesday. This is an improvement over last year’s operating income of $8.8 million and

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PROVIDENCE – Though Lifespan Corp. has fallen behind on its fiscal targets for the year, the health system posted an operating income of $11.5 million for the third quarter of fiscal 2024 ending June 30, according to unaudited financial documents released Wednesday. This is an improvement over last year’s operating income of $8.8 million and the previous quarter’s $4.6 million, which was boosted by one-time or unusual items. So far this year, Lifespan has reported $76.5 million in one-time revenue items, which is $66.7 million greater than the $9.8 million in one-time items reported during the same period last year. The items have “significantly improved” Lifespan’s operations, boosting the operating income for the first three quarters of 2024 to $71.5 million. But without these one-time revenue items, Lifespan would have reported a $5 million loss through the first three quarters, according to the report. Also, without these one-time items, Lifespan would be $70.8 million behind its budgeted operating income through the first three quarters of fiscal 2024, and the health system is projected to be $95.9 million short of its budget for the year, according to an investor presentation. This isn’t a surprise, as Peter Markell, Lifespan’s chief financial officer, has said the health system is likely not going to hit its goal of a 3% operating margin for 2024. Among the challenges Lifespan still faces are: case mix for inpatient discharges, uncompensated care and denials, spending on premium labor as well as medical and surgical supplies and pharmacy drugs. Operating expenses for the quarter increased to $861.5 million for the quarter, up $73.2 million or 9.3% from last year’s $788.3 million. Spending on compensation and benefits rose from $471.9 million last year to $501.5 million in the most recent quarter. This was partly because of an additional 363 full-time employees, which added a total of $10.4 million in compensation and benefits. Supplies and other expenses rose from $216.1 million last year to $247.6 million in the most recent period. Contributing to this was higher drug costs at the Lifespan Retail and Contract Pharmacy – which also contributed to increased revenues – as well as inflation and a rise in adjusted patient days. Net income for the quarter dipped from $14.1 million during the same period last year to $13.3 million for the quarter. The health system’s patient service revenue rose to $724 million for the quarter, which is up $52.6 million over last year’s $671.4 million. Boosting this was a 4.6% increase in discharges, which led to $35.4 million of additional patient service revenue, as well as changes in the payor mix and rates that added $16.6 million to patient service revenue. Also, other revenues rose from last year’s $77.7 million to $ $94.4 million in the most recent quarter and were driven by a $13.9 million, or 12.4% growth in the Lifespan Retail and Contract Pharmacies. Lifespan also reported $33.3 million in Medicaid-directed payments and disproportionate share revenue against $31.3 million in license fees payable, compared with $19.3 million in disproportionate share revenue against $25.7 million in license fees during the same period last year. The state’s largest health system is expected to receive around $47.9 million annually under the Medicaid-directed payment model, compared with paying a net $25.1 million in fiscal year 2023. While the health system will likely not reach its goal of a 3% operating margin this year, Markell told reporters Thursday that the fiscal year 2025 budget “has us getting there.” “But we have to execute on some things,” he said. A major factor will be Lifespan’s $175 million bid to buy the cash-strapped Morton and St. Anne’s Hospitals in Taunton and Fall River from Steward Health Care. Under its bid, Lifespan would acquire the operating assets, employees and some contracts associated with the hospitals through a Section 363 sale in Steward’s bankruptcy, according to an investor presentation. The acquisition would be conditioned on successfully getting the real property that is leased from Medical Properties Trust Inc. The transaction is subjected to bankruptcy court approval and Markell said he would not provide further details on the proposal until an asset purchase agreement is filed. Katie Castellani is a PBN staff writer. You may contact her at Castellani@PBN.com.