SACRAMENTO, Calif.—Sutter Health has released its financial statements of its integrated healthcare delivery system for the third quarter of 2021. Rebounding patient visits and the hard work of staff and clinicians are driving improvement in Sutter’s finances, though challenges remain.
For the three months ended September 30, 2021, Sutter Health reported $104 million in income from operations, up from a loss of $45 million during the same period last year. Total operating revenues were $3.6 billion and operating expenses totaled $3.5 billion. Sutter’s operating margin is now positive, but slim.
“At the beginning of this year, we started to look at ways to change the organization to help us better serve our communities and provide access to affordable, high-quality care for years to come,” said Vice President, Finance and Treasurer, Jonathan Ma. “We’d like to thank our staff and clinicians for their hard work so far this year, which has helped to improve Sutter’s financial condition that will allow us to reinvest back into our communities and plan for the future. We know there is still more work ahead.”
Labor costs in Northern California remain among the highest in the nation. At Sutter, labor accounts for about half of operating expenses, with nationwide staffing shortages and inflation increasing those costs. Each year, Sutter must address $500 million in inflationary pressure from rising labor, supply and other costs. In the third quarter of this year, Sutter spent about $1.7 billion in salaries and benefits.
Despite these challenges, Sutter’s average overall rate increases to health plans have been held to under 3% annually – less than the cost of inflation – for the past seven years.
Sutter is on track to achieve or exceed its goal of a breakeven budget this year, but more work remains to create a sustainable system that is best positioned to serve our communities and patients for the next 100 years. Sutter will continue the difficult work of closing the gap between revenues and expenses by finding efficiencies, identifying opportunities to streamline services and advancing our cost savings efforts.
