How Ascension is paring down amid $3B loss

St. Louis-based Ascension has reported a $3 billion operating loss on revenues of $28.35 billion in fiscal year 2023 as it struggled to address high operating costs and sustained revenue challenges.

Earlier this year, Ascension created the new role of president and strengthened its leadership at the national and market levels to improve hospital operations and ensure sustainability for the future. Eduardo Conrado, former chief strategy and innovation officer, stepped into this role in February, with Joseph Impicciche continuing to serve as CEO. 

Other leadership updates include Craig Cordola transitioning from COO to executive vice president of Ascension Capital, the health system's strategic investment initiative; Polly Davenport, RN, and Carol Schmidt becoming ministry market executives for Ascension Illinois and Ascension Michigan, respecively; and Daniel Jackson moving to the role of ministry market executive for Ascension Wisconsin.

The 140-hospital system has also reorganized its portfolio with various changes — some of which are pending approvals.

Gulf Coast Health System, an Ascension subsidiary, signed an agreement in April to sell all assets and operations associated with Providence Hospital in Mobile, Ala., to the University of South Alabama Health Care Authority. 

Two months later, Ascension entered into an agreement with Sayre, Pa.-based the Guthrie Clinic in which the system will transition its sole corporate membership interest in Our Lady of Lourdes Memorial Hospital in Binghamton, N.Y., as well as related clinical and other business associated with the hospital, to Guthrie. 

In late 2022, Ascension completed the sale of certain assets of its outreach laboratory business and transitioned management of hospital-based labs in certain markets to Labcorp. 

Recently, many other health systems, including Portland, Ore.-based Legacy Health, Philadelphia-based Jefferson Health and Boston-based Tufts Medicine, have inked similar deals selling lab assets to LabCorp. The company sees hospital lab acquisitions as a key growth opportunity as health systems continue to restructure and shuffle operations to reduce costs. 

Ascension's partnership with Labcorp also supports the expansion of lab services and the implementation of advanced technology that will help improve consumer experience, according to the health system. 

Last year, Ascension and Altamonte Springs, Fla.-based AdventHealth disaffiliated from Amita Health, a joint operating company that provided care to patients in the Arlington Heights, Ill., area from 2015 through March 31, 2022. The Ascension Illinois facilities and providers continue to provide care in the greater Chicago area. 

On Aug. 1, 2021, another Ascension subsidiary, Milwaukee-based Ministry Health Care, sold its membership interest in seven hospitals —- representing substantially all operations in the Northern and Central Wisconsin markets —  to Wausau, Wis.-based Aspirus Health. 

"Due to the ongoing industry-wide challenges impacting healthcare providers, business conditions have indicated the carrying value of certain assets within Ascension's markets may not be fully recoverable," management said in its fiscal-year 2023 financial report. 

Ascension ended the 2022 fiscal year (ending June 30) with a $1.8 billion operating loss and the 2023 fiscal year with a $3 billion loss, but that included $1.5 billion in nonrecurring losses and impairment. 

Despite sizable operating losses over the last two years, the health system said its balance sheet and liquidity levels remain strong with sufficient liquidity to continue to provide care for patients.

To boost margins in fiscal year 2024, Ascension said it will focus on improving its acute care assets focused on patients with more complex needs and accelerate growth through its ancillary services and ambulatory networks. 

Health system leaders highlight Ascension Rx as a prime example. The formation of Ascension Rx built upon the system's existing retail pharmacies through growth of specialty pharmacies and a nationwide mail order distribution center. 

Ascension is also investing more money into its ASCs, imaging and physical therapy sites that advance its footprint of service offerings and provide greater convenience to consumers.

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