Allina Health posted another operating loss during the second quarter as the health system opted to not fill about 150 job openings this spring — adding to some 350 layoffs previously announced in July.
Allina Health lost $122.7 million on operations between April and June
To cut expenses, the health system did not fill 150 open positions this spring in addition to 350 layoffs announced in July.
August 23, 2023 at 4:29PM
Between April and June, Allina continued to see financial problems like those facing many hospitals. The health system had higher staffing expenses and difficulty discharging patients because many step-down facilities were already too full, said Ric Magnuson, the health system's chief financial officer, in an interview.
But Allina has a goal to break even or generate an operating profit in 2024 by lowering expenses this year and making strategic investments. Magnuson didn't say whether more job cuts would be needed in the coming months.
"We're at a time of lots of challenges within the health care setting," he said. "While we don't have any changes to announce at this time, we're going to continue to explore opportunities to make sure we return the organization to financial profitability in order to serve the community for years to come."
Allina is one of the largest health systems in Minnesota and western Wisconsin with 10 hospitals, including Abbott Northwestern Hospital in Minneapolis and United Hospital in St. Paul.
It had more than 28,500 employees at the end of last year.
"Allina Health implemented a hiring freeze for non-clinical roles in April 2023," the health system said in a financial statement filed with bondholders this month. "In total, more than 500 positions have been eliminated to support the organization's efforts to reduce costs."
During the second quarter, Allina posted an operating loss of about $122.7 million on $1.28 billion of revenue, worse than a $48.9 million loss in the year-ago quarter. It also exceeded this year's first-quarter operating loss of $101.6 million.
The financial results don't include investment income, an area where Allina — like rival Fairview Health Services — has seen a significant rebound that has helped partly offset the losses on operations.
In 2022, Allina lost money on both operations and investments. Fairview has posted operating losses for four consecutive years.
Allina's inpatient market share in the Twin Cities has declined in recent years, but the shift isn't a big part of the current financial challenge, Magnuson said. That's because inpatient care only accounts for between 30% and 40%, he said, of the health system's overall revenue.
"We are moving quickly and rapidly to improve our financial performance," he said. "We are starting to see some signs of that" in the third quarter.
Capital spending continues at Allina, including an ongoing $1.2 billion investment in a new surgical and critical care pavilion at Abbott Northwestern. While the health system this summer put on hold plans for a replacement hospital in Cambridge, Minn., Allina will open a new primary care clinic this year and multispecialty center in Lakeville next year.
Recently, the health system's board approved plans to expand outpatient services in Eden Prairie. Allina in July opened a new surgery center in Vadnais Heights and is planning for a new surgery center in Lakeville.
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