St. Louis-based Ascension continues to improve its operating performance and aims to ensure long-term sustainability for the health system on the back of a $3 billion operating loss in fiscal year 2023.
In the fiscal first quarter of 2024, which ended Sept. 30, Ascension reported a net operating loss of $194 million, a significant improvement over the previous quarter. It carried that momentum into fiscal Q2 with an operating income of $38.5 million — up from a $291.4 million loss during the same period the previous year.
While second-quarter results demonstrate that Ascension continues to "move in the right direction," according to CFO Liz Foshage, the system remains focused on strengthening its financial performance by improving service line volumes and ancillary services and expanding its ambulatory footprint.
Part of Ascension's turnaround strategy has also revolved around strategic transactions that reorganized its portfolio. The system has offloaded several key assets and hospitals in the last three years, with more deals in the pipeline.
Ascension Michigan, which includes 16 hospitals, plans to sell three campuses — Ascension St. Mary's of Saginaw, Ascension St. Joseph in Tawas and Ascension St. Mary's of Standish — to Midland-based MyMichigan Health this summer.
Last month, Ascension offloaded Our Lady of Lourdes Memorial Hospital System in Binghamton, N.Y., to Sayre, Pa.-based the Guthrie Clinic, now a six-hospital system. It also plans to sell Ascension Via Christi Hospital in Pittsburg, Kan., to St. Louis-based Mercy.
In October, Gulf Coast Health System, another Ascension subsidiary, sold all assets and operations associated with Providence Hospital in Mobile, Ala., to the University of South Alabama Health Care Authority.
That transaction was quickly followed by the sale of Ascension Wisconsin's 50% stake in Network Health to Milwaukee-based Froedtert Health on Nov. 1. The deal gave Froedtert full ownership of the health plan, a spokesperson for the system confirmed to Becker's.
In 2021, Ascension's Ministry Health Care in Milwaukee sold its membership interest in seven hospitals to Wausau, Wis.-based Aspirus Health.
While Ascension continues to restructure its hospital portfolio with strategic sales in certain markets, it is also pursuing significant joint ventures in others.
This summer, the system hopes to cement a joint-venture partnership with Detroit-based Henry Ford Health, pending regulatory approvals. The deal would essentially fold Ascension Michigan's sites of care in the southeastern region of the state under its brand. Ten Ascension Michigan hospitals and all five of Henry Ford's acute care hospitals and other care facilities and assets — including Health Alliance Plan — will be included in the partnership.
Ascension has also completed some key transactions outside of its hospital portfolio over the last couple of years.
In 2022, Ascension sold certain assets from its outreach laboratory business to Labcorp, which now manages the system's hospital-based labs in 10 states: Alabama, Florida, Kansas, Maryland, Michigan, New York, Oklahoma, Tennessee, Texas and Wisconsin.
Many other health systems have offloaded lab assets in similar deals with Labcorp or Quest Diagnostics, including Philadelphia-based Jefferson Health, Boston-based Tufts Medicine and NewYork-Presbyterian in New York City. Every transaction is different, but these types of deals can come with valuable cash infusion, expand lab partnerships and reduce labor costs.
Ascension said its lab asset sale and other "labor stabilization initiatives" helped decrease its overall labor costs by 2.1% year over year to $5.9 billion for the six months ending Dec. 31, 2023.