Advocate Aurora Health Inc. ended 2022 with its total expenses exceeding revenues by $750 million as higher salaries and wages and investment losses cut into the system’s results, according to the system's latest financial filings.
Total revenues for the health system increased 3.4% for the year to $14.54 billion. Topline growth was slower in the fourth quarter with an increase of 0.3% to $3.78 billion.
Patient service revenue was up 4.2% for the year behind increased outpatient and physician visits. Outpatient visits were up 2.8% for the year to almost 4.38 million and physician visits increased 5.5% to 10.2 million.
Within Advocate Aurora’s Wisconsin presence, patient service and capitation revenue grew 2.1% to $6.65 billion, an increase of $139 million.
Expenses across the entire system grew 8.2% for the year to $14.53 billion, an increase of $1.1 billion.
The increase was primarily driven by an 11.7% increase in salaries and wages for the year. Advocate Aurora paid $8.56 billion in salaries and wages in 2022, up nearly $895 million from the prior year. Growth in wages did slow somewhat in the fourth quarter with an increase of 9.1% compared to the prior year.
In financial filings, the company attributed the increase to “an increase in nurse agency costs and higher merit and premium pay for care givers due to the inflationary environment and a shortage of medical professionals.”
Salaries, wages and benefits for health care services were up 12.6% for the year while general and administrative wages increased 3.1%.
Overall, Advocate Aurora’s number of full-time equivalent employees increased 2.6% to roughly 66,200.
Supplies and purchased service expense also increased $204 million or 4.5% for the year to $4.7 billion. The health system attributed the increase to higher drug and supply costs from the inflationary environment.
The growth in expenses and relatively slower revenue gains added up to an operating loss $23.9 million for the year, down from operating income of almost $594 million in 2021.
Beyond growing expenses, Advocate Aurora’s results for the year were also hampered by declines in nonoperating income. The health system saw its net investment income swing from $1.3 billion in 2021 to a $723 million loss.
Much of the decline came in the form of net unrealized losses, which totaled $1.13 billion for the year compared to a gain of almost $80 million in 2021. The system’s income from alternative investments, including real asset funds, hedge funds and private equity, also declined from $926 million in 2021 to $327 million this past year.
The fourth quarter did show some improvement for investment income with net unrealized gains coming in at $215 million, compared to an unrealized loss of $43 million in 2021. In total, net investment income for the fourth quarter was $261 million, up from $240 million the prior year.