Providence posts $310M operating loss in Q3

Renton, Wash.-based Providence reported a $310 million operating loss (-4.3% margin) in the third quarter, down from a $164 million loss (-2.3% margin) in the same period last year, according to financial documents published Nov. 29. 

Despite a 5% year-over-year increase in third-quarter revenue, the 51-hospital system's overall performance was affected by a 7% increase in expenses, which was driven by wage increases, higher supply costs and higher costs to serve patient volumes. 

In the third quarter, salary and benefit expenses rose 8% year over year. Supply costs increased 8% compared to the third quarter of 2022, largely due to a 21% increase in pharmaceutical costs, according to the health system. 

"Health systems nationally continue to contend with significant macroeconomic pressures, including inflation, the shortage of healthcare personnel and inadequate, delayed or denied reimbursement from payers," Providence CFO Greg Hoffman said. "Yet, with a steadfast focus on our recovery and renewal strategies, we are seeing appreciable improvements in many of our local markets."

Providence's turnaround strategy continues to prioritize recruitment and retention to reduce reliance on agency staffing. The system is also addressing discharge challenges related to staffing shortages in community-based post-acute facilities and increasing surgical capacity across its facilities. 

The health system said that shrinking its leadership team last year and rolling out a new divisional structure also helped shore up resources for patients and providers. 

For the nine months ending Sept. 30, Providence reported an $857 million operating loss, compared with a $1.1 billion operating loss in the prior-year period.

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