The COVID-19 pandemic has affected nearly all organizations, including Beaumont Health’s 2020 operations and volumes. As a result, like many other health systems, Beaumont experienced year-over-year volume decreases across the board, affecting inpatient discharges, observations, births, emergency visits, surgeries and physician encounters.
Beaumont’s net income decreased to $329.6 million in 2020, a decrease of $60.6 million compared to the previous year. The organization saw operating revenues fall to $4.58 billion, a $122.4 million decrease over the $4.70 billion reported at the end of 2019. However, the effect of the pandemic revenue decline was offset by CARES dollars as was explicitly contemplated in that aid. Beaumont is applying CARES dollars in 2020 consistent with the Act.
Net operating income for 2020 was $176.6 million (3.9% operating margin), a $19.7 million decrease from 2019’s result of $196.3 million (4.2 % operating margin).
While 2020 has been a challenging period to all health systems, Beaumont has taken steps to lead through the COVID-19 pandemic as well as position itself for the future, such as:
- Leveraging our warehouse and logistics operations to build inventories of personal protection equipment to ensure our caregivers and physicians have the necessary supplies to safely practice in our facilities.
- Leading vaccination efforts, with more than 100,000 vaccines administered to date.
- Investing in staff through $140 million in compensation enhancements, including implementing a $15 per hour minimum wage.
- Handling ongoing COVID-19 testing and antibody testing for 60 employers throughout Michigan via Beaumont Employer Services, including some of the state’s largest employers.
“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. 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 Health Chief Financial Officer John Kerndl said.
Beaumont remains committed to reduce the cost of health care. The health system will continue to leverage the success of its ACO, which is the top performing ACO in Michigan and one of the best in the country, according to the Centers for Medicare and Medicaid Services. The ACO generated $27.8 million in gross savings for contract year 2019. Beaumont is an orthopedic and radiology center of excellence for two of the largest employers in the country.
Non-operating income for 2020 was $162.7 million, a $42.3 million decrease compared to 2019.
Beaumont’s 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 are as follows:
- Cash and investments: $3.49 billion at the end of 2020, compared to $2.27 billion for 2019
- Unrestricted days cash on hand was 307.3 days in 2020 versus 195.1 days in 2019
- Total debt for 2020 was $1.47 billion compared to $1.52 billion for 2019