Although rising expenses forced Advocate Aurora Health to tighten its belt, the nonprofit system stayed well in the green and continued its bounce-back year during the third quarter ending Sept. 30.
The 24-acute-care-hospital system reported $3.55 billion in total revenue during the most recent quarter, up from $3.48 billion during the second quarter and $3.45 billion during the third quarter of last year.
However, a roughly $200 million year-over-year increase in total expenses brought the system’s operating income to $184.2 million, down from $275.8 million during the year prior. Net income for the quarter was $361 million, down again from the third quarter of 2020’s $479.5 million.
The numbers are a pullback from Advocate Aurora’s second quarter, which saw $213.7 million in operating income and $738.8 million in net income.
Regardless, the system’s year-to-date performance is still well ahead of 2020's, when the early stages of COVID-19 had “a significant negative impact” on Advocate Aurora’s business.
Operating income for the nine months ended Sept. 30, 2021, was $486 million (4.7% operating margin) versus the $49.8 million (0.5% operating margin) tallied by the same point last year.
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Cumulative total revenue was also 8.8% higher in 2021, with patient service revenue growing 17.2% during the same period. On the other hand, total expenses rose 4.2%, driven more so by a 9.3% increase in year-to-date supply and purchased services than by the 1.9% bump in salaries, wages and benefits.
Advocate Aurora’s management wrote that it is continuing to execute on a strategic plan pushing for increased consumer-first and whole-person health delivery. They also wrote that the system “will continue to evaluate potential affiliations, divestitures, joint ventures and other strategic relationships that it believes will be advantageous.”
Utilization trends in the quarter were mixed, with hospital outpatient visits and discharges up 17.3% and 2% year over year, respectively, while physician visits and home care visits were down 5.2% and 0.2%.
Year-to-date utilization improved across the board, as discharges (0.8%), outpatient visits (20.7%), physician visits (8.3%) and home care visits (10.1%) were all higher when compared to the first nine months of 2020.
Advocate Aurora has dual headquarters in Milwaukee and Downers Grove, Illinois. Alongside its 24 acute care hospitals, the nonprofit also has an integrated children’s hospital, a psychiatric hospital and more than 500 other locations. The system posted $558 million in full-year earnings for 2020—less than half of the $1.4 billion it claimed during 2019.
Advocate Aurora’s story for the quarter is shared among other large nonprofit systems, which have generally reported higher costs, tempered volume gains and recovering year-over-year revenues. But while some, like CommonSpirit and the Mayo Clinic, were able to outpace their costs, others like Providence were forced to weather losses due to the dual hit of labor costs and delta surges.