Henry Ford’s health system’s latest financial filings show it continues to rely on federal stimulus grants for COVID-19 to stay in the black as the system grapples with rising personnel and supply costs.
Without stimulus funds, the Detroit system would have lost $ 14 million of $ 5.1 billion in operating revenue in the nine months ended September 30, at a 0.3% loss margin. This is a small fraction of the $ 96 million operating loss that Henry Ford would have posted on $ 4.8 billion in revenue for the same period in 2020 had it not been for federal aid, which is a 2.1% loss margin.
Including funds, the system’s operating income was $ 6.5 million in 2021 and $ 264 million in 2020. Henry Ford has registered nearly $ 360 million in humanitarian aid during 2020 and $ 21 million this year.
Even though some nonprofit systems have been remarkably profitable, despite the ongoing pandemic, Henry Ford has found it particularly difficult to weather the surge in personnel and supply costs. The system recently announced that it will recruit 500 nurses from the Philippines over the next few years to help with the ongoing nursing shortage. In September, Henry Ford shut down 120 beds in his five hospitals due to a shortage of people to staff them. The spokesman said that at least some of them had opened, but could not name the exact number.
The latest report from Henry Ford shows that costs of wages and benefits – the largest category at 43% of costs – are up 8% from a year ago. The system said this was due to the hiring of temporary staff and an increase in the minimum wage to $ 15 an hour.
Henry Ford also spent more on payroll programs aimed at ensuring competition in the labor market. Robin Damschroder, Henry Ford’s chief financial officer, said in a statement that labor shortages have forced the system to deal with staff retention, schedule adherence and other allowances to ensure adequate staffing for critical roles such as nurses, technicians and customer service, environmental services. … and nutritionists.
Henry Ford’s procurement costs increased even more – by 18% over the previous year. Damshroder said the rise in COVID cases in 2021 was the biggest factor, including the continued need for materials related to the pandemic. The return to planned operations also played a role. One thing that didn’t really matter: disruptions in the global supply chain that are causing prices to rise elsewhere. Henry Ford said this hasn’t been a big problem for the system yet, but it is gearing up for higher prices, shortages and delays in the near future.
Another expense that skyrocketed in 2021 was the amount that Henry Ford’s health plan paid to serve members. This position has grown by almost 15% in the period of 2021. Henry Ford said deferred demand for outpatient and professional services accounted for more than half of the increase. The rest is the costs associated with Medicare Advantage and Medicaid membership, as well as costs associated with treatment, testing, and vaccines for COVID-19. On the last point, Damshroeder said the health plan has spent $ 100 million since the beginning of the year on COVID treatment and testing.
Henry Ford’s revenues in the nine months ended September 30 were up less than half of their nine months, or just 4.7% over the same period last year. At the same time, net income from patient services increased by 18.5% due to the increase in volumes, which reflects the recovery from the decline in volumes caused by the pandemic in 2020. The number of outpatient operations increased by 29.4% compared to the same period last year, and the number of inpatient operations – by 10%. In the period of 2021, the number of visits to emergency departments increased by 7%, and the number of extracts – by 4.2%. Meanwhile, virtual visits fell by almost 18%.
“New mutations in the virus and low consumer confidence may continue to impact System revenues throughout the 2021 balance sheet,” Henry Ford wrote in his financial statement.