The earnings struggles of Catholic Health Initiative’s Louisville operations are continuing.
Jewish Hospital and St. Mary’s Healthcare recorded an operating loss of $41.1 million in the first nine months of the fiscal year, which is 45 percent worse than the loss they incurred during the same period for 2017. The loss excludes restructuring charges and other items.
Operating revenue, at $554 million, was down $33.2 million, or 5.7 percent, according to a quarterly report.
The struggles help explain why CHI’s Kentucky unit, KentuckyOne Health, is trying to sell most of its Louisville assets. KentuckyOne had said about a year ago that “significant challenges” in the health care industry had prompted it to put up for sale Jewish hospital and other Louisville facilities.
KentuckyOne and CHI said in December that they were in exclusive negotiations to sell the assets to Blue Mountain Capital Management, a New York-based hedge fund.
Jewish, a 462-bed hospital, and other KentuckyOne facilities have been plagued by financial struggles, which were worsened by the health care system’s separation last year from the University of Louisville Hospital, which had financially propped up KentuckyOne’s other facilities.
CHI’s refocusing of the Kentucky unit — “on a smaller community footprint, centered in central and eastern Kentucky,” as the system says in its most recent quarterly report — seems to be paying off: Excluding results from Jewish and the other Louisville assets KentuckyOne wants to sell, the unit generated operating earnings of $78.8 million for the first nine months of the year, up from $33.9 million from a year earlier. The figures again exclude restructuring charges and other items.
Despite those improvements, CHI, which is in merger talks with Dignity Health, continues to struggle: CHI incurred a third-quarter loss from operations of $35.3 million, more than twice as high as the loss it incurred in the third quarter of last year.
Third-quarter operating earnings fell in six of nine regions. In its Pacific Northwest and Texas regions, operating profit fell by more than half. A year ago, those regions generated an operating profit of more than $187 million. In this year’s third quarter, that profit fell to less than $90 million.
The system’s third-quarter revenue, at $3.71 billion, fell 3.5 percent, more than offsetting lower expenditures, which, at $3.73 billion, fell 1.7 percent.
The revenue decline is a result, in part, of a lower number of patients: CHI said its third-quarter acute admissions declined 4.7 percent, and the number of days acute patients stayed fell 3.6 percent.
The health system reported total cash and unrestricted investments of $5.8 billion as of March 31, down 9.4 percent from June 30. It had 149 days of cash on hand, down from 161 days as of June 30.
The system’s assets, at $20.5 billion, were down 6.4 percent from June 30, in part because CHI determined that the stated value of the Jewish and St. Mary’s assets exceeded their fair value by $272 million.