Baptist Health of Little Rock reported an operating loss of $12.93 million in 2022, as the financial stresses of COVID-19 continued to course through health care systems.
In 2022, Baptist Health reported total revenue of $1.89 billion, a 1.1% increase from 2021. But expenses climbed 4.2% to $1.9 billion during the year.
Baptist received $35 million in pandemic relief revenue, according to its unaudited 2022 financial statement. In 2021, it collected $67 million in pandemic revenue relief, which helped it end the year with a $43.9 million operating income. “Those relief dollars really did help,” Brent Beaulieu, CFO of Baptist Health, told Arkansas Business.
The nonprofit health care system, which includes 11 hospitals, urgent care centers and more than 100 primary and specialty care clinics in Arkansas and eastern Oklahoma, reported its patient service revenue increased 4.3% to $1.7 billion last year, even though the patient volume isn’t quite back to pre-pandemic levels, he said.
The patient revenue climbed thanks to Baptist Health seeing rate increases from government and commercial payers.
Medicare increased its payments by around 3%, Beaulieu said. “That was the largest Medicare increase that I’ve seen in the 25 years I’ve been doing health care,” he said. “It still was well below the inflationary expense we had on clinical staff cost, but it did help.”
Baptist’s largest expense was its labor costs. It spent $979 million on salaries and wages last year, a 4.45% increase from 2021. Beaulieu also said that Baptist raised salaries to retain employees. “The reality we have going forward is higher labor costs than what it was pre-COVID by a pretty noticeable amount,” he said.
Last year, Baptist paid $101 million for contract labor for health care services. Beaulieu expects contract labor to fall to about $50 million this year, as Baptist focuses on training, recruiting and keeping employees. It also relies on its nursing school graduates to fill vacancies.
Overall, when other income is included, Baptist posted a loss of $81.5 million in 2022, compared with an income of $84.9 million in 2021. Nearly all of the loss in 2022, however, came from a $75.1 million investment loss.
Last year was the worst financial year for hospitals since the start of the pandemic, according to Kaufman Hall of Chicago, which advises health care and education organizations and collects data from more than 900 American hospitals.
About half of U.S. hospitals finished the year with a negative margin as growth in expenses outpaced revenue increases, according to the company’s January news release.
Beaulieu has budgeted “not a huge loss, but a loss” for 2023, even though Baptist expects to receive some money from the Federal Emergency Management Agency for its emergency response during the pandemic dating back to 2020.
“It’s a lot of work to do that,” he said about applying for the funds. “I don’t know of many other health systems throughout the nation that did that.” If the money is approved, Baptist could receive $5 million, if not more.
Beaulieu also doesn’t think there will be any more pandemic relief revenue from the state or federal government as the Biden administration announced it will end the COVID-19 national and public health emergencies on May 11.
And he expects Baptist will start to see the number of uninsured patients rise. The public health emergency required people who had Medicaid to remain covered during the pandemic. But now Arkansas, and other states, will go through a re-enrollment process. “There are people today that have coverage that will not have it in the future,” he said.
