Community Health loses $40M in first half of year, cuts 80 administrative jobs

Community Health Network cut 80 administrative positions and suffered a loss from operations of nearly $40 million in the first half of the year as it felt the impact of the COVID-19 pandemic.

The Indianapolis-based hospital system announced the job cuts Friday in a filing with bondholders.

A spokeswoman on Monday said the system eliminated the jobs about six weeks ago, describing them as a mix of occupied and open positions. She declined to say whether those cuts included any senior managers.

Overall, Community Health has made cuts totaling about $62 million. They include the elimination of the system’s 401(k) match from Aug. 1 through Dec. 31, the closure and dissolution of a rehabilitation hospital in Kokomo, and the consolidation of certain revenue and information systems.

Hospitals across the nation have seen a huge downturn in admissions, emergency visits, surgeries, and outpatient visits in recent months as the pandemic swept across the country. Hospitals in Indiana and many other states suspended all non-urgent and elective procedures for several months to cope with the surge of COVID-19 cases.

Community Health said that for the first six months of the year, outpatient surgeries fell 35%, inpatient surgeries fell 20%, emergency visits fell 16% and admissions fell 12%.

“The pandemic impacted all the network’s hospitals,” the system said in its filing. Community Health operates six hospitals, including three in Marion County.

During the peak of the pandemic, Community Health’s facilities saw an average of 101 positive cases a day from COVID-19 and had 129 other patients under investigation.

Community Health’s sharp loss from operations of nearly $39.7 million for the first six months represents a huge widening in losses between the first and second quarters. The system did not break out second-quarter financial information, but in May, it reported a loss of $13.7 from operations. That would mean the second quarter’s loss was about $26 million, or about double the loss from operations in the first quarter.

It also reported a loss of $79.3 million on investments during the first half, as the economy and financial markets suffered. But that represents a recovery since the first quarter, when Community reported a loss of $201 million in investments.

Monthly revenue fell from a high of $710 million in January to $365.5 million in April, and then rebounded for the next two months, up to $607.7 million in June.

While revenue was falling, some expenses were climbing. The system said it spent $35.5 million on COVID-19-related expenses for the first six months of the year, for labor, supplies, equipment, bed and ventilator rental, creation of negative-air-flow rooms and purchase of personal protective equipment. But, overall, operating expenses fell $55.1 million during the first half of the year.

On the other hand, the use of telemedicine for virtual visits rose by 321%. Beginning in mid-March, many of Community Health’s administrative and non-clinical employees shifted to a work-from home environment, which is expected to continue at least through Dec. 31.

Community Health also recorded an impairment charge of $2.1 million for its old cancer center on the Community North campus. It said it has determined no additional uses exist for the facility and expects it will be demolished by end of the year. The system opened a brand new, $60 million cancer center nearby in 2017.

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