Providence CFO eyes 'strong 2024' after $176M operating gain in Q1

Renton, Wash.-based Providence is back in the black after reporting a $176 million operating gain (2.3% margin) in the first quarter, a significant improvement on the $345 million operating loss (-5.1% margin) reported in the first quarter of 2023. 

The 51-hospital system saw first-quarter patient revenues increase 11% year over year to $7.8 billion while expenses rose 6.4% to $7.6 billion, according to financial documents. Salaries and benefits costs grew by 4% year over year to $3.9 billion as wage increases were offset by lower premium labor expenses. Contract labor declined by 42% year over year for the quarter. 

"We are navigating the headwinds facing healthcare by focusing on our strategies for recovery and renewal," CFO Greg Hoffman said in a May 17 news release shared with Becker's. "We expect the positive momentum to continue throughout the year and are excited for a strong 2024."

Providence saw higher patient volumes in the three months ended March 31, versus 2023, with inpatient admissions up 3% and case mix adjusted admissions up 4%. Excluding one-time gains, net operating revenues were up 8% year over year, driven by higher volumes and improved reimbursement rates.

The health system also strengthened its cash position from the $675 million sale of revenue cycle management company Acclara to R1 RCM as well as the sale of laboratory services to LabCorp.

"These transactions represent our strategies to diversify and deconstruct the traditional model of healthcare through partnerships, allowing Providence to expand access to care, become more nimble and collaborate with others to better serve our patients, caregivers and communities in a more affordable way," Mr. Hoffman.

Financial market results drove investment gains of $205 million for the first quarter, compared with $259 million in the prior year, bringing Providence’s total unrestricted cash and investments to $8.6 billion as of March 31, 2024. 

Providence reported a net income of $360.3 million in the first quarter, compared to a net income of $454.5 million during the same period in 2023.

Rod Hochman, MD, will retire as president and CEO of the health system at the end of 2024, capping off a 45-year career in healthcare.

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