Geisinger reports $842 million loss in 2022; remains confident in business and financial strategy

Mar. 10—Geisinger reported an $842 million loss last year as operating expenses outpaced revenues and its investment portfolio plummeted.

The bond rating agency Moody's also recently downgraded the Danville-based health system's rating, noting Feb. 7 its expectation that "Geisinger's operating challenges will result in weak operating cash flow ... for a protracted period." Significantly stronger and sustained cash flow margins could lead to a rating upgrade, while failure to improve operating performance could contribute to another downgrade.

In a recent financial disclosure, Geisinger, with a pronounced footprint in Scranton and Northeast Pennsylvania, reported a roughly $239 million operating loss for 2022. COVID-19 had a significant negative impact on Geisinger's operations and financial performance last year, according to the disclosure, which notes the health system also experienced "significant inflationary pressures."

Losses from investing and financing activities were about $602.7 million, in sharp contrast to 2021, when Geisinger saw gains of $472.3 million in those areas. Geisinger's assets totaled $7.2 billion as of Dec. 31, 2022. That's about a $700 million decrease from the end of 2021, with the drop "attributable primarily to net investment losses," the disclosure notes.

The Moody's downgrade dropped the health system's bond rating one notch, from A1 to A2 with a stable outlook, which is still investment grade. The stable outlook reflects the agency's view "that management will be able to show ongoing improvement in operating cash flow margins and stabilized liquidity."

Geisinger expressed confidence.

"Despite the unprecedented headwinds impacting the healthcare industry due to rising costs of labor, supplies and drugs, we are confident in our business and financial strategy," Geisinger said in a statement. "We will continue to focus our efforts on accelerating our operational efficiencies as we make the necessary investments in our people, technology and facilities to help us grow and deliver on our mission to make better health easier for the communities we serve."

Speaking generally, Daniel West, Ph.D., a professor of health administration at the University of Scranton who sits on the combined board of Commonwealth Health's Moses Taylor Hospital and Regional Hospital of Scranton, said pandemic challenges, staffing issues, inflation, turbulent investment markets and other factors made 2022 a difficult year for health systems.

"It hit operating expenses in a very direct way," he said.

Asked if the 2022 financial challenges will affect operations or the health system's plans for growth, including its proposed expansion of Geisinger Community Medical Center in Scranton's Hill Section, Geisinger referred to its statement.

The potential GCMC expansion has been a source of contention as Scranton works through the long process of its first comprehensive zoning update in 30 years. The hospital's expansion plans depend on zoning changes to parts of Colfax Avenue that have yet to be approved.

A split city council narrowly introduced the proposed new zoning ordinance Tuesday, with members Bill King, Jessica Rothchild and Gerald Smurl in favor of introduction and members Tom Schuster and Mark McAndrew opposed.

The ordinance would accommodate GCMC's tentative expansion plans, which include new parking facilities in the 200 and 400 blocks of Colfax Avenue and an expanded hospital in Colfax's 300 block. Hill Section residents wary of the expansion's impact on their neighborhood have voiced opposition to the proposed zoning changes there while advocating for stricter height limits on new structures in the area.

Council plans to table the zoning ordinance Tuesday pending a public hearing tentatively set for mid-April. Amendments remain possible.

Geisinger spent more than $6.2 million since early 2021, buying properties around GCMC in preparation for the expansion.

As the zoning process plays out, work continues at the future site of Geisinger Behavioral Health Center Northeast in Moosic, a collaboration between Geisinger and Acadia Healthcare. That planned inpatient behavioral health facility at 60 Glenmaura National Blvd. will serve adult, pediatric and adolescent patients and aims to fill a void for mental health services in the region.

Geisinger also broke ground in June on a new, state-of-the-art cancer center in Dickson City. The planned 55,000-square-foot facility along Viewmont Drive will offer a range of services, including radiation oncology, a first for Geisinger in Lackawanna County.

And, Geisinger recently purchased the former Ice Box complex at 3 W. Olive St., Scranton, for $23 million. It already had a pronounced presence there prior to the purchase; earlier this year, officials noted plans to expand operations at the facility.

Geisinger served about 1.17 million people in 2022, a 10% increase from 2021, according to the financial disclosure.

Contact the writer: jhorvath@timesshamrock.com; 570-348-9141; @jhorvathTT on Twitter.

Contact the writer: jhorvath@timesshamrock.com; 570-348-9141; @jhorvathTT on Twitter.