Asante gets a look at the pandemic’s financial toll
We know the devastating effects the pandemic has had on our patients, their families and our workforce. Now its financial impact on Asante is becoming clear.
Results for the second quarter of fiscal year 2022 are in, and as the recent Balanced Scorecard shows, the numbers are sobering. Asante’s key performance measure, the operating margin, ended the second quarter at -10.3% — far below the +3% goal. The year-to-date margin is -6%.
Asante must reach an operating margin of at least 1.5% by the end of the fiscal year in September for any PEAK incentive to be paid out.
Like health systems across the country, Asante received a double punch this fiscal year, which began in October 2021:
- High COVID volumes and longer-than-usual hospital stays forced the cancelation of revenue-generating elective surgeries.
- An increase in staffing needs caused labor expenses to soar due to high-cost contract labor such as travelers.
Asante budgeted $7 million for contract labor but paid $81 million to ensure there was adequate staffing to meet care demands. Pay for travelers and other contract staff averages 3.5 times the typical hourly rate. These factors led to a $34 million loss in the first half of FY 2022.
“These numbers should begin to reverse as elective procedures return to pre-pandemic levels, but it will take time,” said CEO Scott Kelly. “We will need to focus on increasing revenues and reducing expenses while still building up staffing levels.”
Asante has faced financial challenges before. During the 2008 U.S. financial crisis, the operating margin fell to -0.4% only to rebound to 6% the following year. The margin saw another sharp dip in 2017 and bounced back to 4% the next fiscal year.
“We will rebuild, but we will have new priorities,” Kelly said. “What won’t change is our commitment to be our patients’ health partner for life — every person, every time.”
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