Excela’s net income falls $37M in March
Community hospital system Excela Health reported a stunning $37 million net income loss for the month of March as non-emergency medical services were halted in Pennsylvania to prevent the spread of COVID-19.
The loss included $28 million in investments — non-operating revenue — leaving a $9 million income loss from providing core medical services for the month, most of which occurred during the final two weeks, Excela CFO Thomas Albanesi said Wednesday.
The good news: the Greensburgbased health system had ended February $3 million in the black from operations, a pivot from an $11 million loss for the same month in 2019.
“We were having a nice fiscal turnaround at Excela before the pandemic hit,” Mr. Albanesi said.
The operating margin loss for the three-hospital system for March was 21%, which eased to a loss of 1.3% or $6 million for the nine months ending March 31.
Gov. Tom Wolf ordered Pennsylvania hospitals to suspend nonemergency operations and other medical procedures March 19, choking off an important revenue stream for health care providers.
On May 8, Excela began resuming elective admissions, surgeries and other procedures, but Mr. Albanesi said losses were expected to continue for April and part of May, leading to anticipated losses for the fiscal year ending June 30.
“We prepared for a surge in COVID-19 patients, but we never saw the surge to the degree that some people had projected,” CEO John Sphon said.
The system did not furlough any employees during the outbreak, which seemed to peak April 22, followed by a continuing decline in the number of COVID-19 patients treated.
Excela offset the losses by drawing a $15 million line of credit in May and receiving “significant advances” in reimbursement from the Centers for Medicare and Medicaid Services in April, something that many hospitals received.
Also, the third-quarter results do not include $10.4 million Excela received in April through the Public Health and Social Services Emergency Fund, which provided $100 billion to hospitals and other health care providers for expenses incurred by the COVID-19 pandemic.
The emergency funding will be recorded in the health system’s fourth quarter.
Other signs of fiscal recovery for the nine months ending March 31: patient admissions, emergency room visits and newborn deliveries were essentially flat when compared to a year ago, despite competition from a new hospital that opened in January in Hempfield, two miles from Excela Health Westmoreland, the system’s flagship institution.
Open heart surgeries at Excela spiked 61% to 201 from 125 a year ago. Mr. Sphon credited the increase to the recruitment of two cardiothoracic surgeons last fall.