As Sutter Health continues to respond to the COVID-19 pandemic and enters a period of financial recovery, the organization released its quarterly unaudited financial updates on May 17, 2021.
SACRAMENTO, Calif.—For the quarter ending March 31, 2021, Sutter Health reported an operating loss of $49 million and a negative 1.4% operating margin. Total operating revenues were $3.43 billion and operating expenses totaled $3.48 billion. Labor costs represented $1.67 billion of the operating expenses. Income attributable to Sutter Health was $189 million for the three months ended March 31, 2021.
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. 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.
Total operating expenses increased 2.0% for the three months ended March 31, 2021, compared to the three months ended March 31, 2020. Salaries and employee benefits increased $16 million, or 1.0%, from the same period in 2020, due to increased pension costs and state-mandated COVID-19 paid time-off costs.
“Sutter’s efforts to address our affordability challenges started well before the pandemic, but the current global health crisis has further heightened the situation and the urgency to address it,” said Sutter Health Chief Financial Officer Brian Dean. “Going forward, we are evaluating every aspect of our integrated model of care and developing a multi-year plan to become self-sustaining in our operation so that we can continue to best serve our patients and communities.”
As both COVID and the healthcare industry’s structural challenges will remain for the foreseeable future, Sutter’s multi-year plan will address this structural gap and define a future path forward as it navigates a challenging and dynamic healthcare environment. The plan will include a mixture of cost savings, organizational efficiencies, performance improvements and new strategies to reach patients.
More information available at https://www.sutterhealth.org/about/financials.
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