LEBANON — Despite ongoing challenges, Dartmouth Health’s finances continued to show improvement through the end of the last fiscal year, according to a Wednesday filing with bondholders.
In the fourth quarter of the 12 months that ended June 30, the health system posted a $47.8 million operating gain, which was a significant turnaround from a loss of nearly $52 million for the same quarter the previous year.
The positive finish left the health care system with a 1.5% loss for the 12 months ending June 30 — about $45.3 million.
The system has posted losses of $93.2 million, 4.2%, over the three quarters ending March 31, meaning DH closed the gap by 2.7 percentage point in one quarter.
“Staffing shortages, wage pressures and the increased costs of medications and supplies will continue to be challenges in the coming months, but we anticipate this forward momentum will continue,” Audra Burns, a DH spokeswoman, wrote in a Wednesday email. “We have begun the process of rebuilding our financial health with an eye toward sustainability, growth, and continuing to deliver high-quality care to our patients.”
In Wednesday’s filing, Dan Jantzen, DH’s CFO, chalked up the system’s financial improvement to a performance improvement plan, or PIP, launched in November 2022.
The system also benefited in June from a $30 million employee retention credit, a federal refund for businesses and tax-exempt organizations that had employees and were affected during the COVID-19 pandemic.
While the $45.3 million loss for 2023 was higher compared with the loss of $22.1 million DH recorded in 2022, it received very little federal stimulus aid the past year — just $1.8 million compared with $98.8 million the prior year.
“(Fiscal year 2023) was a challenging year as the organization continued to be impacted by the post-pandemic factors that have affected most U.S. health care providers including significant wage pressures due to the tight labor market and premium labor costs associated with travelers, inability to discharge inpatients on a timely basis due to post-acute impediments (also work force related), and general inflationary pressures resulting in costs that exceeded payment increases from third party payers,” Jantzen wrote in the filing.
Expenses for fiscal year 2023 totaled $3.15 billion, up $257.6 million, or about 9%, from the prior year.
Primary drivers of expense growth were compensation, medications and purchased services.
Meanwhile, revenues were up to $3.07 billion, an increase of $301.4 million, or 11%, with about half of that increase coming from increases in services delivered to patients and increases in contracted payment rates. The other half was attributable to the expansion of DH’s contract and specialty pharmacy business.
The performance improvement plan, which set out to achieve break-even monthly performance in fiscal year 2024, which began July 1, included a focus on productivity, access and throughput, a variety of workforce-related initiatives and system redesign, according to Wednesday’s filing. In June, Dartmouth Hitchcock Medical Center and Dartmouth Hitchcock Clinics laid off 75 workers and eliminated about 100 vacant positions.
“We have no current plans for another workforce reduction,” Burns said in the Wednesday email.
There is evidence of increased productivity. In the year ending in June, DH had 37,542 discharges, up from 35,865 in 2022. Total patient days were up to 189,411 from 181,601 the prior year. Occupancy, as a percentage of staffed beds, was up to nearly 87% from 83% in 2022. Surgical cases were up 10%.
In addition to DHMC and the clinics, the system also includes Alice Peck Day Memorial Hospital in Lebanon; Cheshire Medical Center in Keene, N.H.; Mt. Ascutney Hospital and Health Center in Windsor; New London Hospital; and the Visiting Nurse Association and Hospice of Vermont and New Hampshire.
DH continues to grow. Southwestern Vermont Healthcare, based in Bennington, joined DH in July. Valley Regional Hospital in Claremont also is seeking regulatory approval to join DH. The Wednesday filing indicates DH and Valley Regional anticipate that transaction will be finalized by the end of this calendar year.
DHMC, which had 396 beds at the beginning of the year, added a net increase of 28 patient beds with the opening of its new $150 million pavilion in May. At the same time, 36 existing beds were closed for renovation. Renovations are expected to be complete by the second quarter of fiscal year 2024, resulting in a total increase of 64 beds.
As a result of the new beds, DH is “now in a stronger position to meet excess patient demand,” Jantzen wrote.
At least one DH member still has some improvement yet to go. DH removed Cheshire Medical Center from its obligated group, which holds the members’ debt, in late June.
“Like many major hospitals and health systems in the United States, Cheshire is facing significant financial challenges,” DH Treasurer Michael Waters wrote in a July 3 message to bondholders. “Cheshire has developed a Performance Improvement Plan that we expect will produce improvement to their operating margin results during (fiscal year 2024).”
Earlier this month, Dr. Joseph Perras left his role as Mt. Asctuney’s CEO to take over leadership at Cheshire. Winfield (Win) Brown has taken over leadership of Mt. Ascutney on an interim basis, according to the hospital’s website.
Nora Doyle-Burr can be reached at ndoyleburr@vnews.com or 603-727-3213.
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