SACRAMENTO, Calif.—Sutter Health has released its financial statements for the second quarter of 2021. Sutter Health’s integrated healthcare delivery system’s financial challenges remain considerable and more difficult decisions lie ahead.
For the three months ending June 30, 2021, Sutter Health reported $106 million in income from operations, up from a loss, mostly attributable to the COVID-19 pandemic, of $321 million during the same period last year. Total operating revenues were $3.5 billion and operating expenses totaled $3.4 billion.
Despite the improvement, Sutter Health’s balance sheet remains vulnerable and, as such, we continue to stay the course on our plan to stabilize our system’s financial health to help ensure fiscal resiliency and sustainability going forward.
Over the next year, Sutter Health must repay approximately $1 billion of temporary pandemic funds. Our labor costs for the first six months of 2021 were more than $3.2 billion. In addition to focusing on operations, investments in stock markets, while subject to market volatility, are at near all-time highs boosting up investment income and unrealized net gains.
As a result of the sweeping financial review we started earlier this year, we are implementing several programs to make the organization more agile and resilient going forward. Examples include identifying efficiencies, closing select low-volume programs and redeploying many of the impacted employees throughout the system, and transitioning many of our support staff to regular mobile work, reducing our real estate footprint.
All these efforts are in service of our mission to serve our communities and provide access to affordable, high-quality care for the next 100 years.
Over the past four years, our revenue remained flat while our costs continued to increase. For the past two years, we have been operating at a loss. In addition to increasing labor costs, costs in many areas are steadily increasing, and state-mandated seismic upgrades will require significant capital as will IT upgrades, along with meeting our retirement obligations.
We remain focused on rehabilitating our balance sheet by consistently achieving a positive operating margin to support reinvestment in the communities we serve. To do that, Sutter Health will continue to make the decisions necessary to support operational sustainability and provide our patients and communities with the award-winning care they have come to expect from us.