Allina Health Reports Record Annual Loss but Sees Improvement in Fourth Quarter Financial Performance

Allina Health, one of Minnesota’s largest nonprofit health systems, reported its largest annual loss on operations last year but showed significant improvement in financial performance during the fourth quarter. The Minneapolis-based health system attributed the overall loss of $317.8 million to industrywide challenges such as high staffing expenses and difficulty discharging patients to step-down facilities.

However, in the fourth quarter, Allina saw a decrease in salary and benefit costs compared to the same period in 2022, along with an increase in revenue. Chief Financial Officer Ric Magnuson stated that the health system was able to care for more people while managing expenses effectively, despite ongoing challenges such as Minnesota’s lack of population growth and the aging population.

In an effort to address financial pressures, Allina Health announced the elimination of about 350 jobs last July. The savings from this workforce reduction contributed to the improved financial results in the fourth quarter. Additionally, the health system saw success in hiring more workers directly, reducing reliance on costly temporary labor hired through agencies.

Allina Health also focused on increasing access to skilled nursing facilities to reduce delays in patient transfers and ensure patients receive the appropriate level of care. The health system’s efforts to expand access to these facilities and improve patient transfers have been reflected in their financial statement.

Despite facing challenges, Allina Health remains optimistic about its future financial performance. S&P Global Ratings recently lowered its rating on Allina’s long-term debt but gave the health system a stable outlook due to the improvements seen in the fourth quarter and the implementation of a turnaround plan aimed at returning operating performance to break-even by 2024.

Overall, Allina Health’s financial performance in the fourth quarter showed positive signs of improvement, with operating income of about $2 million on $1.38 billion of revenue. The health system continues to make strategic changes, such as hiring Optum for IT and bill-collection services and reconfiguring services at Mercy Hospital in Anoka County, to ensure long-term financial stability and quality patient care.