The “payer mischief that has plagued” Chicago-based CommonSpirit over the past several years remains a top concern, CFO Daniel Morissette said on the health system’s Oct. 1 earnings call.
Mr. Morissette said that while he thinks the system has made some real progress with its managed care teams, “it is still an incredibly difficult environment to get paid for the work that we’re doing.”
The investor call followed the release of the health system’s fiscal 2025 financial report on Sept. 25. CommonSpirit recorded a $225 million operating loss (-0.6% operating margin) in the year ended June 30, an improvement from an $875 million loss (-2.4% margin) posted last year.
COO Terika Richardson said on the call that CommonSpirit’s payer strategies team has shifted to engaging insurers at a systemwide level, leveraging scale and centralized tools to improve contracting in both fee-for-service and value-based models.
“The strategies outlined here involve complex negotiations, innovative partnership models and a thorough understanding of market dynamics,” she said.
She said the team establishes clear goals and metrics for what the system aims to achieve in each area.
“On an annual basis, we have successfully met our objectives through strong collaboration and enhanced relationships with national and leading regional payers,” she said.
CommonSpirit’s Finance and Corporate Controller Benjie Loanzon said that normalized patient service revenue per adjusted admission grew about 2.8% year over year. He attributed the improvement to various improvements the system made in revenue cycle areas, escalating and resolving payer issues that improve collections, increasing point-of-service collections and improving clinical documentation.
“Although we have seen improvements in our revenue realization goals, we are not there yet,” he said. “We have more to do in this area.”
Another challenge looming over the health system is the effect of the One Big Beautiful Bill Act.
“If it’s not changed, it will provide some material reductions in the reimbursements that we receive,” Mr. Morissette said. “Fortunately, I will say most of the reductions — not all — are in fiscal year ’28 to fiscal year ’32. We are working feverishly with our peers in this industry, our advocacy teams, etc., hoping that there is some relief coming for the hospital industry.”
