Category Archives: Cash Reserves

COVID-19 shreds Sutter Health’s finances in matter of weeks

Posted on by • Posted in Cash, Cash Reserves, Coronavirus, Crisis, Crisis Management, Economic Crisis, Economic Stimulus, Employee Furlough, Employee Hiring Freeze, Employee Layoffs, Employee Pay Cuts, Employee Protections, Health Policy, Health System, Hospital, Hospital Industry, Net Income, Operating Expenses, Operating Income, Operating Margin, Operating Performance, Operating Revenue, Pandemic • Leave a comment

https://www.healthcaredive.com/news/covid-19-shreds-sutter-healths-finances-in-matter-of-weeks/578021/

Dive Brief:

  • Sutter Health, one of California’s largest and most powerful hospital networks, is getting pounded by losses related to the COVID-19 outbreak, according to a report issued to bondholders.
  • Sutter posted an operating loss of $236 million for the first quarter ending March 31, and a net loss of almost $1.1 billion. That’s even though California officials did not begin locking down activities in the state until the second part of March. Sutter saw an operating loss of $360 million in April alone, after the first quarter concluded, suggesting net losses for the second quarter could be even larger.
  • Much of the losses are attributed to the abrupt cutoff of patient flow to Sutter hospitals, clinics and medical offices. Only 5.7% of its intensive care unit beds are being used to treat COVID-19 patients, Sutter reported, and almost 32% of its ICU beds were unused as of May 11.

Dive Insight:

For decades, Sacramento-based Sutter Health has been considered the most powerful hospital operator in Northern California, with facilities throughout the Bay Area and even the more rural part of the state north of San Francisco. Critics allege its market dominance contributes to the long-term cost imbalance for hospital services between the northern and southern parts of the state.

Like many other chains and hospitals, it took only a few weeks of the COVID-19 outbreak and California’s statewide stay-at-home order to hamstring Sutter’s operations. Between March 17 and the end of April, inpatient bed days at Sutter hospitals declined by 23%, its ambulatory facilities have experienced volume declines of 73%, and emergency room visits were down 43%.

In the Wednesday note to bondholders, Sutter reported unaudited losses of $1.1 billion on revenue of $3.2 billion for the first quarter. It netted $394 million on revenue of $3.3 billion in the same period last year.

Sutter joins other large hospital networks such as the Mayo Clinic and Kaiser Permanente in reporting recent revenue losses related to COVID-19.

Yet the numbers for Sutter could get grimmer over the second quarter as revenue continues to sink. For April, it projects operating losses of $360 million and a negative operating margin of 50.5%, not counting congressional relief funds.

“Sutter anticipates in the near term at least a $300 million per month reduction in operating performance until containment of COVID-19,” it reported. It is also spending tens of millions of dollars to purchase equipment to confront a potential resurgence of COVID-19 this fall and winter — on top of some $57 million it has already spent to prepare for the pandemic.

As a result, Sutter says it has either cut the hours of about 5,000 of its employees, reassigned them or sent them for retraining.

While Sutter noted that California is slowly reopening the state after six weeks of shutdown, it remains to be seen whether patient flow will return to normal. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, warned this week that reopening too soon could lead to a spike in new coronavirus cases.

The funds Sutter has received from the Coronavirus Aid, Relief, and Economic Security Act have alleviated the financial pain to some extent. It has received $205 million to date, plus another $1 billion in accelerated Medicare claims payments from CMS. Factoring that in, Sutter says April operating losses would be cut to $168 million.

Sutter is also sitting on about $6 billion in cash and liquid investments, but notes it has lost $500 million from its portfolio since the start of the year. It has also borrowed $400 million from a $500 million credit line so far this year and obtained another $100 million credit line last month.

 

 

 

 

Fitch Q2 outlook for nonprofit hospitals: ‘worst on record’

Posted on by • Posted in 2020 Election Issues, Cash, Cash Reserves, Cash-Flow Improvements, Clinical Testing, Contact Tracing, Coronavirus, Credit Quality, Credit Ratings, Crisis, Crisis Management, Demand, Economic Crisis, Economic Stimulus, Elective Procedures, Elective Surgery, Employee Furlough, Employee Hiring Freeze, Employee Layoffs, Employee Pay Cuts, Employer-Based Health Insurance, Essential Workers, Financially Distressed, Health Insurance Coverage Adequacy, Health Policy, Health System, High Deductible Health Plans, High Drug Prices, High Premiums, High Prices, Hospital, Hospital Industry, Infection Control Plan, Infectious Virus, Market Outlook, Mortality, National Strategy, Net Income, Operating Expenses, Operating Income, Operating Margin, Operating Performance, Operating Revenue, Out of Pocket Expenses, Pandemic, Preexisting Conditions, Public Health, Public Safety, Quarantine, Social Distancing, Surprise Bills, Uncertainty, Underinsured, Unemployment, Unemployment Insurance, Uninsured • Leave a comment

https://www.healthcaredive.com/news/fitch-analysts-hospital-worries-FY-2020/577875/

Nicklaus Children's Health System Receives A+ Rating from Fitch ...

From the Mayo Clinic to Kaiser Permanente, nonprofit hospitals are posting massive losses as the coronavirus pandemic upends their traditional way of doing business.

Fitch Ratings analysts predict a grimmer second quarter: “the worst on record for most,” Kevin Holloran, senior director for Fitch, said during a Tuesday webinar.​

Over the past month, Fitch has revised its nonprofit hospital sector outlook from stable to negative. It has yet to change its ratings outlook to negative, though the possibility wasn’t ruled out.

Some have already seen the effects. Mayo estimates up to $3 billion in revenue losses from the onset of the pandemic until late April — given the system is operating “well below” normal capacity. It also announced employee furloughs and pay cuts, as several other hospitals have done.

Data released Tuesday from health cost nonprofit FAIR Health show how steep declines have been for larger hospitals in particular. The report looked at process claims for private insurance plans submitted by more than 60 payers for both nonprofit and for-profit hospitals.

Facilities with more than 250 beds saw average per-facility revenues based on estimated in-network amounts decline from $4.5 million in the first quarter of 2019 to $4.2 million in the first quarter of 2020. The gap was less pronounced in hospitals with 101 to 250 beds and not evident at all in those with 100 beds or fewer.

Funding from federal relief packages has helped offset losses at those larger hospitals to some degree.

Analysts from the ratings agency said those grants could help fill in around 30% to 50% of lost revenues, but won’t solve the issue on their own.

They also warned another surge of COVID-19 cases could happen as hospitals attempt to recover from the steep losses they felt during the first half of the year.

Anthony Fauci, the nation’s top infectious disease expert, warned lawmakers this week that the U.S. doesn’t have the necessary testing and surveillance infrastructure in place to prep for a fall resurgence of the coronavirus, a second wave that’s “entirely conceivable and possible.”

“If some areas, cities, states or what have you, jump over these various checkpoints and prematurely open up … we will start to see little spikes that may turn into outbreaks,” he told a Senate panel.

That could again overwhelm the healthcare system and financially devastate some on the way to recovery.

“Another extended time period without elective procedures would be very difficult for the sector to absorb,” Holloran said, suggesting if another wave occurs, such procedures should be evaluated on a case-by-case basis, not a state-by-state basis.

Hospitals in certain states and markets are better positioned to return to somewhat normal volumes later this year, analysts said, such as those with high growth and other wealth or income indicators. College towns and state capitols will fare best, they said.

Early reports of patients rescheduling postponed elective procedures provide some hope for returning to normal volumes.

“Initial expectations in reopened states have been a bit more positive than expected due to pent up demand,” Holloran said. But he cautioned there’s still a “real, honest fear about returning to a hospital.”

Moody’s Investors Service said this week nonprofit hospitals should expect the see the financial effects of the pandemic into next year and assistance from the federal government is unlikely to fully compensate them.

How quickly facilities are able to ramp up elective procedures will depend on geography, access to rapid testing, supply chains and patient fears about returning to a hospital, among other factors, the ratings agency said.

“There is considerable uncertainty regarding the willingness of patients — especially older patients and those considered high risk — to return to the health system for elective services,” according to the report. “Testing could also play an important role in establishing trust that it is safe to seek medical care, especially for nonemergency and elective services, before a vaccine is widely available.”

Hospitals have avoided major cash flow difficulties thanks to financial aid from the federal government, but will begin to face those issues as they repay Medicare advances. And the overall U.S. economy will be a key factor for hospitals as well, as job losses weaken the payer mix and drive down patient volumes and increase bad debt, Moody’s said.

Like other businesses, hospitals will have to adapt new safety protocols that will further strain resources and slow productivity, according to the report.​

Another trend brought by the pandemic is a drop in ER volumes. Patients are still going to emergency rooms, FAIR Health data show, but most often for respiratory illnesses. Admissions for pelvic pain and head injuries, among others declined in March.

“Hospitals may also be losing revenue from a widespread decrease in the number of patients visiting emergency rooms for non-COVID-19 care,” according to the report. “Many patients who would have otherwise gone to the ER have stayed away, presumably out of fear of catching COVID-19.”

 

 

 

Tower Health takes financial hit from COVID-19, Epic install costs

Posted on by • Posted in Cash, Cash Reserves, Economic Stimulus, Elective Procedures, Elective Surgery, Electronic Health Record (EHR), Employee Furlough, Employee Hiring Freeze, Employee Layoffs, Employee Pay Cuts, Financially Distressed, Health System, Hospital, Net Income, Nonoperating Income, Operating Expenses, Operating Income, Operating Margin, Operating Performance, Operating Revenue • Leave a comment

https://www.beckershospitalreview.com/finance/tower-health-takes-financial-hit-from-covid-19-epic-install-costs.html?utm_medium=email

Ballinger.com – Architecture | Engineering | Interiors

Tower Health reported higher revenue in the nine months ended March 31, but the West Reading, Pa.-based health system ended the period with an operating loss, according to recently released unaudited financial documents.

The health system reported revenue of $1.6 billion in the first three quarters of fiscal year 2020, up 13.8 percent from $1.4 billion a year earlier. Higher expenses and reductions in patient volume in the most recent quarter due to the COVID-19 pandemic hindered further revenue growth.

Tower Health said expenses climbed 19.2 percent year over year to $1.7 billion in the nine months ended March 31. In the first three quarters of fiscal 2020, the health system recorded $27.1 million in one-time expenses — $7 million related to Epic implementation costs at newly acquired hospitals, and the remainder was related to other one-time transaction costs.

The health system said it had 102 days cash on hand as of March 31, down 52 days from a year earlier. The decrease was primarily due to Epic implementation costs and integration expenses, Tower said.

The health system said it has made significant revenue cycle improvements and expects progress to continue.

“During the COVID-19 crisis revenue cycle management is aggressively pursuing advanced payments and outstanding claim resolution from all major commercial payors as well as ensuring capture of additional reimbursement for services such as telemedicine,” Tower said.

The health system ended the first three quarters of fiscal 2020 with an operating loss of $131.9 million, compared to an operating loss of $48.5 million in the same period a year earlier. 

After factoring in nonoperating losses, Tower Health recorded a net loss of $153.9 million in the first three quarters of fiscal 2020. In the same period a year earlier, it reported a net loss of $29.3 million. 

To offset financial damage from COVID-19, Tower Health has furloughed about 1,000 employees and received $166 million in advance Medicare payments, which must be repaid. The health system also received $66 million in grants under the Coronavirus Aid, Relief and Economic Security Act.

 

Quantifying the massive blow to hospital volumes

Posted on by • Posted in 2020 Election Issues, Cash, Cash Reserves, Cash-Flow Improvements, Coronavirus, Credit Quality, Credit Ratings, Crisis, Crisis Management, Economic Crisis, Economic Stimulus, Economy, Economy Reopening, Elective Procedures, Elective Surgery, Emergency Preparedness, Employee Benefits, Employee Furlough, Employee Hiring Freeze, Employee Layoffs, Employee Pay Cuts, Employee Protections, Employer-Based Health Insurance, Essential Health Benefits, Financially Distressed, Health Insurance Coverage Adequacy, Health Policy, High Deductible Health Plans, High Drug Prices, High Premiums, High Prices, Infection Control, Infectious Virus, Operating Expenses, Operating Income, Operating Margin, Operating Performance, Operating Revenue, Out of Pocket Expenses, Pandemic, Preexisting Conditions, Surprise Bills, Uncompensated Care, Underinsured, Unemployment, Unemployment Insurance, Uninsured • Leave a comment

https://mailchi.mp/f4f55b3dcfb3/the-weekly-gist-may-15-2020?e=d1e747d2d8

Even after hearing dozens of reports from health systems about how steep their COVID-related volume losses have been, we were still floored by this analysis from healthcare analytics firm Strata Decision Technology, documenting a 55 percent drop in patients seeking hospital care across the country.

The report, which analyzed data from 228 hospitals in 51 health systems across 40 states, found that no clinical service line was immune from steep volume losses. The graphic below shows volume loss by service line in March-April 2020 compared to the same period in 2019.

Unsurprisingly, ophthalmology, gynecology, ortho/spine and ENT—all specialties with a high portion of elective cases, and heavily dependent on procedures—saw volume declines of greater than 70 percent. But even obstetrics and neonatology (which we expected to be “pandemic proof”) and infectious disease (which we thought might be busier in the throes of COVID-19) saw losses of 20-30 percent.

Looking at specific procedures, complex elective surgeries like spinal fusion and hip and knee replacements were almost completely obliterated. Precipitous declines in encounters for chronic diseases like coronary heart disease and diabetes (down 75 and 67 percent, respectively) and cancer screenings (a 55 percent decline in breast health and a 37 percent decline in cancer care overall) point to the likelihood of worrisome disease exacerbations, and a future full of more complex patients.

The volume losses, plus a 114 percent rise in uninsured patients, led to average two-week losses of $26.5M per health system across the study’s cohort. Strata will continue to track and publish volume changes, but this early snapshot paints a bleak picture of staggering financial hits, and “lost” patient care that will carry lasting ramifications for the health of communities nationwide.

 

 

 

 

Putting a pillar of the community in jeopardy

Posted on by • Posted in 2020 Election Issues, Cash, Cash Reserves, Community, Community Hospital, Coronavirus, Crisis, Crisis Management, Economic Crisis, Economy, Economy Reopening, Elective Procedures, Elective Surgery, Employee Benefits, Employee Furlough, Employee Hiring Freeze, Employee Layoffs, Employee Pay Cuts, Employee Protections, Financially Distressed, Health Policy, Hospital, Hospital Industry, Leadership, Pandemic, Public Health, Public Safety, Quarantine, Social Distancing • Leave a comment

https://mailchi.mp/f4f55b3dcfb3/the-weekly-gist-may-15-2020?e=d1e747d2d8

Pillars of the Community - New York Improv Teams

It’s easy to become numb to the numbers we’re bombarded with on a daily basis—case counts, deaths, financial losses, unemployment claims, bailout funding. An article from the Washington Post this week put a very human face on how the coronavirus crisis is playing out on the ground, profiling the experience of 115-bed Griffin Hospital in Derby, CT.

We first got to know Griffin, and its CEO Patrick Charmel, years ago in the course of work for our former employer. It’s a remarkable, fiercely independent organization—recognized as the flagship hospital of the “Planetree” patient-centered care model, and a decade-long fixture on Fortune’s list of Top 100 Best Companies to Work For. But the COVID-19 wave hit Griffin hard, as it did much of Connecticut.

With the high cost of caring for COVID patients, and lost revenue from cancelled procedures, Griffin has had to make hard decisions about furloughing and redeploying staff—incredibly difficult for a small facility that has been a pillar of the community for a century. Charmel has been able to secure some relief in the form of advance payment from Medicare, but his efforts to lobby for a share of the state’s allocation of CARES Act grant funding for hospitals proved unsuccessful, and so the future of the hospital—or at least its continued viability as an independent organization—is in jeopardy.

In the words of Griffin’s chief financial officer, “This could be devastating for us.” As the recovery begins, and questions begin to be asked about the billions of dollars of “bailouts” paid to “greedy hospitals”—an easy narrative for the media to latch onto—it’s worth remembering what’s happening to Griffin Hospital, and to hundreds of other similar organizations across the country.

Countless communities rely on these hospitals, and their survival is worth safeguarding.

 

 

 

Cartoon – The New Trend in Bankruptcies

Posted on by • Posted in 2020 Election Issues, Bankruptcy, Cartoon, Cash, Cash Reserves, Cash-Flow Improvements, Chapter 11, Financially Distressed, Honesty, Integrity, Leadership, Leadership Cares, Leadership Culture, Leadership Integrity, Leadership Intent, Trust, Truth • Leave a comment

Moral Bankruptcies Cartoons and Comics - funny pictures from ...