Southfield-based Beaumont Health experienced year-over-year volume decreases across the board in 2020 due to the COVID-19 pandemic, affecting inpatient discharges, observations, births, emergency visits, surgeries, and physician encounters.
The health systems’ net income was $329.6 million, a decrease of $60.6 million from 2019. Operating revenues fell to $4.58 billion, a $122.4 million decrease. However, the effect of the pandemic revenue decline was offset by CARES dollars, which Beaumont continues to apply.
Net operating income for 2020 was $176.6 million with a 3.9 percent operating margin, a $19.7 million decrease from 2019’s result of $196.3 million with a 4.2 percent operating margin.
In response to the virus, Beaumont has built inventories of personal protective equipment for employees; administered more than 100,000 COVID-19 vaccines to date; invested in staff through $140 million in compensation enhancements, including implementing a $15 per hour minimum wage; and handling ongoing COVID-19 testing and antibody testing for 60 employers throughout Michigan.
“The effects of the pandemic are expected to continue into 2021 as Beaumont has cared for more COVID-19 patients than any other health care system in Michigan,” says John Kerndl, CFO. “The Beaumont team remains focused on leading through the COVID-19 pandemic and providing low cost, high-quality care as demonstrated by our designation of 19 national rankings by U.S. News and World Report. Though surgeries, diagnostic services and Emergency Center visits are recovering, they are not back to pre-COVID-19 levels.”
Beaumont plans to continue to leverage the success of its Accountable Care Organization, groups of health care providers that give care to Medicare patients. It generated $27.8 million in gross savings for contract year 2019.
Nonoperating income for 2020 was $162.7 million, a $42.3 million decrease compared to 2019.
Beaumont says its financial indicators remain strong, primarily as a result of cash increases related to Medicare Advanced Payments of $505 million, CARES Act payments, and deferred payroll taxes in the year.
The treasury indicators as of Dec. 31 include $3.49 billion in cash and investments, compared to $2.27 billion for 2019; unrestricted days cash on hand of 307.3 days compared to 195.1 days in 2019; and total debt was $1.47 billion compared to $1.52 billion for 2019.
Beaumont has eight hospitals, 145 outpatient sites, nearly 5,000 physicians, 38,000 employees, and 3,500 volunteers.