Sutter's operating loss shrinks to $49M in Q2

Sacramento, Calif.-based Sutter Health saw its operating loss narrow in the second quarter of fiscal year 2021, according to unaudited financial documents.

Five things to know:

1. Sutter recorded a $49 million operating loss for the three months ending March 31, compared to a $236 million operating loss in the same period a year prior. The improvement comes as revenue increased for the 24-hospital system. 

2. Second-quarter operating revenues for the health system totaled $3.4 billion, up $255 million year over year. Sutter saw its patient services revenue increase by $188 million year over year, primarily because of COVID-19 recovery. 

3. The health system's second-quarter operating expenses grew 2 percent year over year to $3.5 billion, with salaries and employee benefits costs increasing $16 million year over year because of pensions and state-mandated COVID-19 paid time off.

4. Sutter ended the quarter with a net income of $189 million, compared to a $1.1 billion loss in the same period a year before. The health system attributed the improvement to a decrease in operating losses and increased investment income. Its operating margin grew year over year from negative 7.4 percent to negative 1.4 percent.

5. "The additional expenses over the past year, combined with the ongoing unpredictability in patient volumes, has continued to significantly impact Sutter's financial situation and pre-pandemic declining operating margins," the organization said in a press release shared with Becker's. "That is why Sutter is taking important actions to address and close its financial gap. While Sutter's forecast to break even by year end is ambitious, the organization believes it is achievable as it remains focused on serving its communities, enhancing access to high-quality healthcare and lowering the total cost of care."

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