By Dave Muoio
Ascension’s finances were on track for strong recovery until cybersecurity issues threw a wrench in its operations and revenues.
Across the 2024 fiscal year ended June 30, the Catholic giant reported a US$1.4 billion loss from recurring operations (-4.9% recurring operating margin), a US$1.8 billion operating loss (inclusive of impairment and nonrecurring losses) and a nearly US$1.1 billion net loss.
Each of these were improvements over the previous fiscal year, when Ascension reported a US$1.5 billion loss from recurring operations (-5.5% recurring operating margin), a US$3 billion operating loss (inclusive of impairment and nonrecurring losses) and US$2.7 billion net loss.
However, the numbers would have landed much closer to even if it weren’t for a breach discovered in May that led to a system-wide EHR disruption and downtime procedures.
“This incident resulted in delays in revenue cycle processes, including insurance verification processes, claims submission and payment processing, as well as the incurrence of certain remediation costs, which collectively led to negative impacts to results of operations and cash flows during May and June 2024,” Ascension wrote in its quarterly filing.
In other filings and an accompanying press release, Ascension’s management illustrated the impact by highlighting operating performance across the first 10 months of the fiscal year, just before the attack.
Through that period Ascension had cut its loss from recurring operations down to US$79 million (-0.3 per cent recurring operating margin), as opposed to the prior year’s US$1.2 billion recurring operations loss (-5.1% recurring operating margin) during the equivalent window.
2024’s 10-month operating loss (inclusive of impairment and nonrecurring losses) was US$332 million, while the net loss sat at a narrow US$4 million.
Ascension said its investigation and analysis of the attack is still ongoing and will be concluded during the ongoing fiscal year. However, it had completely restored EHR access by the end of the 2024 fiscal year and expects claims submissions for certain patients treated during downtime to be completed by the end of the calendar year.
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“Now that we are well on our way from recovering from May’s cyber event, our focus is growing our patient volume and sustaining and improving the health of even more individuals in the communities we serve,” Ascension EVP and Chief Financial Officer Saurabh Tripathi, who joined in April, said in a release.
Same-facility patient volumes were 8 per cent to 12 per cent lower on average during May and June, management reported, though exact numbers on full-year volumes likely won’t be available until the second quarter of fiscal 2025. However, across 10 months and on a same-facility basis, equivalent discharges were up 2 per cent, total discharges 2.9 per cent, emergency room visits 2.5 per cent, inpatient surgery visits 2 per cent, outpatient surgery visits 0.5 per cent and encounters per provider 3.9 per cent.
Total operating revenue across 10 months rose from US$23.6 billion in 2023 to US$24.8 billion in 2024, while full-year year-to-year revenues were a bit closer at US$28.3 billion and US$28.6 billion.
Total operating expenses across 10 months rose from US$24.8 billion to US$24.9 billion year-to-year, and through the full 12 months were US$30 billion and US$30.1 billion.
The total expense increases stayed slim due to a combination of Ascension’s performance improvement efforts and a restructuring of its portfolio via several hospital sales and other service outsourcing, management wrote. On the other hand, cost per equivalent discharge through 10 months rose 0.2 per cent due to inflationary pressures, they wrote.
The portfolio adjustments also fueled Ascension’s US$402 million of impairment and nonrecurring losses, which management noted were “primarily attributable to the Ascension Michigan and Illinois markets.”
Ascension’s financial results filing also noted the impact of February’s Change Healthcare breach on its revenue cycles, and said it has subsequently diversified its claim clearinghouses to protect against future incidents.
Ascension noted in the filings that it secured advanced payments from the government and dipped into its short-term liquidity facilities to mitigate the cybersecurity incidents’ impact on cash flow.
Still, Tripathi stressed that the company’s “balance sheet and liquidity levels remain strong with sufficient liquidity to continue to provide care for patients. Ascension’s solid financial foundation of a strong balance sheet with approximately US$41 billion of assets and over US$15 billion of liquidity was built to weather a storm like this.”
Even factoring in the cybersecurity events’ impacts, Tripathi and President Eduardo Conrado said the system is pleased with the US$1.2 billion year-over-year operating improvement Ascension was able to achieve.
“The US$1.2 billion year over year improvement in FY24 is a demonstration of our team’s commitment to quality, stewardship, and the fidelity to our Mission.” Conrado said in a statement. “Our focus on data-driven decisions, financial discipline and most importantly the needs of communities we serve has strengthened Ascension’s foundation, and put us on a great path as we look to the future.”
The Catholic giant has generally been shedding several of its hospitals nationwide, recently disclosing deals with Prime Healthcare in Illinois and UAB Health in Alabama. A joint venture set to close later this month also hands operations of eight Michigan hospitals over to Henry Ford Health.
