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Asante gets a look at the pandemic’s financial toll

Second-quarter results show the effects of canceled surgeries and soaring contract labor costs.

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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.”

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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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13 Comments.

  • Labor expenses…I cannot help but think this would not have been a problem if Asante had permitted the staff who chose not to get the vaccine, to stay on. This line item is perhaps the only one that Asante had any control over.

    • John Rotheray, MBA
      May 24, 2022 11:46 am

      Asante’s financial woes have at least a degree of being self-inflicted. It’s clear that Asante’s bottom line is being dragged into the red by traveling nurse costs, but how much of that could have been avoided with a less strict vaccine policy? Having to hire replacement nurses now will lock in higher fixed labor costs since the supply of vaxxed nurses is so low. I look forward to the time when Asante buries the hatchet and invites all the nurses on the sidelines back to work. Not only will it be good for the bottom line, but it will also remove a wedge that is causing some people in our community to avoid Asante’s services. The governor’s order provides more leniency for exempted health care workers than Asante’s policies. Section 4 of the order only requires that employers “who grant medical or religious exceptions to take reasonable steps to ensure that unvaccinated health care providers and staff are protected.” http://records.sos.state.or.us/ORSOSWebDrawer/Recordhtml/8582120

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    • Thank you, Asante. I understand that making that decision about vaccinated employees was not easy. Throughout this entire pandemic everybody’s been trying to make the right decision. Looking back way they are correct? We will probably know in about 20 years. I am honored to work for an organization that makes really hard decisions that are not popular but stands by them.

    • I think that rather than going against Federal and State mandates that barred healthcare workers from continuing to work while unvaccinated (putting themselves, their loved ones, and their patients at a higher risk of severe Covid infection and death), it could have been helpful to increase pay for our hardworking staff that stayed on. A lot of positions in nursing were left across the country because travelling nurse pay is so much higher than permanent full-time employee pay. Instead of paying 3-4x’s more for temporary contract help, they could have paid 1.5-2x’s more to encourage established employees not to leave.

  • Kitty Sallas
    May 24, 2022 7:33 am

    Thanks for the info! I see this as motivating. This too shall pass, I know we’re #AsanteStrong enough to overcome and regain the parts of our organization’s financial wellbeing that have understandably fallen lower than we like. It’s just a matter of time.

  • Elizabeth C
    May 24, 2022 7:35 am

    I know people need it; however, a peak bonus at this time does not seem realistic for the financial survival of Asante. I’m willing to go without. Consider my peak bonus an investment back into the institution.

  • We have been so fortunate to consistently receive pay increases, PEAK bonus’, and most recently a retention bonus despite the heavy toll the pandemic has taken on our organization.
    Thus, I feel it would be more than fair if we miss a PEAK bonus to help with the recovery process.

    • I am glad that many of you received a retention bonus. Many of us did not get retention bonuses. The pay raises in my dept were small, but we did get one. Administration staff such as PSR’s, Referral Coordinators etc have not been well recognized for staying on with Asante through the pandemic and did not receive any retention bonuses. Many employees do not feel that they count. In order to survive financially with the prices of gas to drive to work, food etc I feel that we need at least a cost of living raise.

      • YES! We didn’t get very much recognition and support staff like PSRs are on the very front of any patient visit. We are the ones that take the brunt of enforcing masking, social distancing etc. We work hard to. Why is it that we are always the afterthought? It is discouraging. I rely on my bonus. It is the only way I can afford holiday gifts for my kids. Now with inflation and all that, I really needed it.

  • The remaining nurses that worked through the pandemic, got transferred to ERs, ICUs, Med Surg floors on different shifts, different schedules, with no training time, even if they never worked those areas, deserve their PEAK bonus this year, and all years. Many are still here, training new staff and working with what they have, to care for patients, the best they can. Don’t short them because of the pandemic, they stepped up and took care of patients while others worked from home or quit. They deserve the full PEAK this year. I’ve been in healthcare for over 30 years, these last several have been the hardest of my career, just my humble opinion. Good day.

  • Robert Begg
    May 26, 2022 2:01 pm

    We appreciate the comments and suggestions noted. The decision to hold fast to requiring direct patient care providers to be vaccinated against COVID-19 is based in scientific review of the available studies and was directly connected to patient safety and our Vision to be your trusted health partner for life – every person, every time. We are in an unprecedented time in health care and find ourselves in the greatest deficit we have faced. Consideration of how best to spend the limited resources we have while showing appreciation and value to our hardworking team is one of the most difficult decisions we make in leadership. If you have direct questions you would like to have answered, you may email me directly: [email protected]

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