Category Archives: Cash

Early pandemic loans adding to hospital financial woes

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The bill is coming due for federal loans given to hospitals early in the COVID-19 pandemic, adding to their financial woes, Oregon Public Broadcasting reported May 28. 

The Medicare Accelerated and Advance Payment program offered hospitals short-term interest- free loans, according to the report. These loans are coming due as hospitals’ costs are rising quickly and revenue from patient stays and surgeries is growing more slowly. 

The idea behind the program was that hospitals would be able to pay back the advance once the pandemic passed and operations returned to normal, according to the report. Hospitals are still dealing with the effects of the pandemic, but the federal government wants to recoup the money to keep Medicare funded.  

In March 2021, HHS began recovering those cash advances by paying hospitals 25 percent less for Medicare reimbursement claims, according to the report. Earlier this year, HHS began paying hospitals 50 percent less for reimbursement claims. 

Hospitals lobbied for the loans to be forgiven, but were unsuccessful, according to the report. 

Genesis Healthcare warns of possible bankruptcy

Posted on by • Posted in Bankruptcy, Cash, Cash Management, Cash Reserves, Coronavirus, Crisis, Crisis Management, Economic Crisis, Economic Recovery, Financial Viability, Financially Distressed, Liquidity, Net Income, Nursing Home, Operating Expense Reduction, Operating Expenses, Operating Income, Operating Margin, Operating Metrics, Operating Performance, Operating Revenue, Pandemic • Leave a comment

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News

Kennett Square, Pa.-based Genesis Healthcare, one of the largest post-acute care providers in the U.S., warned that bankruptcy is possible if its financial losses continue. 

“The virus continues to have a significant adverse impact on the company’s revenues and expenses, particularly in hard-hit Mid Atlantic and Northeastern markets,” Genesis CEO George V. Hager Jr., said in a Nov. 9 earnings release.

Mr. Hager said government stimulus funds the company received in the third quarter of this year fell nearly $60 million short of the company’s COVID-19 costs and lost revenue. 

Genesis said it has taken several steps to help offset the financial damage linked to the pandemic, including delaying payment of a portion of payroll taxes incurred through December. 

But the company warned that bankruptcy is possible if its financial losses continue. 

“Even if the company receives additional funding support from government sources and/or is able to execute successfully all of its these plans and initiatives, given the unpredictable nature of, and the operating challenges presented by, the COVID-19 virus, the company’s operating plans and resulting cash flows, along with its cash and cash equivalents and other sources of liquidity. may not be sufficient to fund operations for the 12-month period following the date the financial statements are issued,” Genesis said. “Such events or circumstances could force the company to seek reorganization under the U.S. Bankruptcy Code.”

Genesis ended the third quarter of this year with a net loss of $62.8 million, compared to net income of $46.1 million in the same period a year earlier. 

11 hospitals laying off workers

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Layoffs costing hundreds of people their jobs in NC but notices don't capture true scope of cuts | WRAL TechWire

The financial challenges caused by the COVID-19 pandemic have forced hundreds of hospitals across the nation to furlough, lay off or reduce pay for workers, and others have had to scale back services or close. 

Lower patient volumes, canceled elective procedures and higher expenses tied to the pandemic have created a cash crunch for hospitals. U.S. hospitals are estimated to lose more than $323 billion this year, according to a report from the American Hospital Association. The total includes $120.5 billion in financial losses the AHA predicts hospitals will see from July to December. 

Hospitals are taking a number of steps to offset financial damage. Executives, clinicians and other staff are taking pay cuts, capital projects are being put on hold, and some employees are losing their jobs. More than 260 hospitals and health systems furloughed workers this year and dozens of others have implemented layoffs. 

Below are 11 hospitals and health systems that announced layoffs since Sept. 1, most of which were attributed to financial strain caused by the pandemic. 

1. NorthBay Healthcare, a nonprofit health system based in Fairfield, Calif., is laying off 31 of its 2,863 employees as part of its pandemic recovery plan, the system announced Nov. 2. 

2. Minneapolis-based Children’s Minnesota is laying off 150 employees, or about 3 percent of its workforce. Children’s Minnesota cited several reasons for the layoffs, including the financial hit from the COVID-19 pandemic. Affected employees will end their employment either Dec. 31 or March 31.

3. Brattleboro Retreat, a psychiatric and addiction treatment hospital in Vermont, notified 85 employees in late October that they would be laid off within 60 days. 

4. Citing a need to offset financial losses, Minneapolis-based M Health Fairview said it plans to downsize its hospital and clinic operations. As a result of the changes, 900 employees, about 3 percent of its 34,000-person workforce, will be laid off.

5. Lake Charles (La.) Memorial Health System laid off 205 workers, or about 8 percent of its workforce, as a result of damage sustained from Hurricane Laura. The health system laid off employees at Moss Memorial Health Clinic and the Archer Institute, two facilities in Lake Charles that sustained damage from the hurricane.

6. Burlington, Mass.-based Wellforce laid off 232 employees as a result of operating losses linked to the COVID-19 pandemic. The health system, comprising Tufts Medical Center, Lowell General Hospital and MelroseWakefield Healthcare, experienced a drastic drop in patient volume earlier this year due to the suspension of outpatient visits and elective surgeries. In the nine months ended June 30, the health system reported a $32.2 million operating loss. 

7. Baptist Health Floyd in New Albany, Ind., part of Louisville, Ky.-based Baptist Health, eliminated 36 positions. The hospital said the cuts, which primarily affected administrative and nonclinical roles, are due to restructuring that is “necessary to meet financial challenges compounded by COVID-19.”

8. Cincinnati-based UC Health laid off about 100 employees. The job cuts affected both clinical and non-clinical staff. A spokesperson for the health system said no physicians were laid off. 

9. Mercy Iowa City (Iowa) announced in September that it will lay off 29 employees to address financial strain tied to the COVID-19 pandemic. 

10. Springfield, Ill.-based Memorial Health System laid off 143 employees, or about 1.5 percent of the five-hospital system’s workforce. The health system cited financial pressures tied to the pandemic as the reason for the layoffs. 

11. Watertown, N.Y.-based Samaritan Health announced Sept. 8 that it laid off 51 employees and will make other cost-cutting moves to offset financial stress tied to the COVID-19 pandemic.

9 hospitals with strong finances

9 hospitals with strong finances

Posted on by • Posted in Balance Sheet, Cash, Cash Management, Cash Reserves, Credit Quality, Credit Ratings, Financial Ratios, Health System, Hospital, Hospital Industry, Liquidity, Net Income, Nonoperating Income, Operating Expenses, Operating Income, Operating Margin, Operating Performance, Operating Revenue, Operating Room • Leave a comment

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Here are nine hospitals and health systems with strong operational metrics and solid financial positions, according to reports from Fitch Ratings, Moody’s Investors Service and S&P Global Ratings.

1. St. Louis-based Ascension has an “AA+” rating and stable outlook with Fitch. The system has a strong financial profile and a significant presence in several key markets, Fitch said. The credit rating agency expects Ascension will continue to produce healthy operating margins. 

2. Phoenix-based Banner Health has an “AA-” rating and stable outlook with Fitch and S&P. Banner’s financial profile is strong, even taking into consideration the market volatility that occurred in the first quarter of this year, Fitch said. The credit rating agency expects the system to continue to improve operating margins and to generate cash flow sufficient to sustain strong key financial metrics. 

3. Cincinnati-based Bon Secours Mercy Health has an “AA-” rating and stable outlook with Fitch. The health system has a good payer mix, a leading position in several of its markets and adequate margins to support its growth, Fitch said. The credit rating agency expects the system to maintain strong operating profitability.  

4. Children’s Hospital of Philadelphia has an “Aa2” rating and stable outlook with Moody’s and an “AA” rating and stable outlook with S&P. The hospital has a strong market position and healthy liquidity, Moody’s said. The credit rating agency expects CHOP’s market position and brand equity will support its recovery from disruption caused by COVID-19. 

5. Milwaukee-based Children’s Wisconsin has an “Aa3” rating and stable outlook with Moody’s and an “AA” rating and stable outlook with S&P. The health system has strong cash flow margins, Moody’s said. The credit rating agency expects the health system’s financial performance to remain solid, given its commanding market presence and demand for services. 

6. Philadelphia-based Main Line Health has an “AA” rating and stable outlook with Fitch. The credit rating agency expects the system’s operations to recover after the COVID-19 pandemic and for it to resume its track record of strong operating cash flow margins. 

7. Midland-based MidMichigan Health has an “AA-” rating and stable outlook with Fitch. The system has generated healthy operational levels through fiscal year 2020, and Fitch expects it to continue generating strong cash flow. 

8. Columbus, Ohio-based Nationwide Children’s Hospital has an “Aa2” rating and stable outlook with Moody’s. The system has a strong market position in pediatric services in Columbus and the broad central Ohio region, and its advanced research capabilities will support volume recovery from disruption caused by COVID-19, Moody’s said. The credit rating agency expects Nationwide Children’s margins to remain strong and for cost management initiatives and volume recovery to drive improvements. 

9. Chicago-based Northwestern Memorial HealthCare has an “Aa2” rating and stable outlook with Moody’s. The health system had strong pre-COVID margins and liquidity, Moody’s said. The credit rating agency expects the system to maintain strong operating cash flow margins. 

A Wall Street Giant Tapped $1.5 Billion in Federal Aid for Its Hospitals

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https://www.bloomberg.com/news/articles/2020-09-14/a-wall-street-giant-tapped-1-5-billion-in-federal-aid-for-its-hospitals

LifePoint’s Castleview Hospital in Price, Utah.

Private equity firm, flush with cash, sees ‘upside’ and more acquisitions.

Like hospital chains across the U.S., LifePoint Health tapped federal relief money to blunt the cost of the Covid-19 pandemic. It was a potent lifeline, a total of $1.5 billion.

But LifePoint is unusual in one respect, its owner: private equity firm Apollo Global Management, led by billionaire Leon Black.

LifePoint was certainly eligible for the money. But the extent of the federal assistance could contribute to concern in Washington over whether private equity-backed hospitals should have been. In July, the U.S. House passed a bill that would require health-care companies to disclose any private equity backing when seeking short-term loans from the federal Medicare program.

The reason for lawmakers’ concern: Private equity firms have ample access to cash. As recently as June, the Apollo fund that owns LifePoint had more than $2 billion to support its investments. Apollo, which manages $414 billion, recently told investors in an internal document that LifePoint was in such a strong market position that it was planning to make acquisitions of less fortunate hospitals.

The relief flowing to LifePoint illustrates a drawback of a government program designed to send out money quickly to every hospital, regardless of financial circumstances, according to Gerard Anderson, a health policy professor at Johns Hopkins University.

“This particular hospital system does not appear to need the money,” he said.

LifePoint and Apollo say they absolutely did. In their view, taxpayer money helped cover the soaring cost of treating Covid-19 patients and lost revenue because of the loss of fees from lucrative elective procedures. The assistance enabled the chain to retain all of its workers and provide essential service to its communities, they said.

“No health-care provider, including LifePoint, is immune to this, regardless of their ownership,” said LifePoint spokesperson Michelle Augusty.

Said an Apollo spokesperson: “Apollo is proud of LifePoint’s response to the Covid pandemic as they continue to provide vital care for both Covid and non-Covid patients.’’

LifePoint owns a far-flung collection of small-town hospitals, from Western Plains Medical Complex in Dodge City, Kansas, to Bourbon Community Hospital in Paris, Kentucky. For years, private equity has been pushing into every corner of American health care. Many medical professionals worry that these Wall Street-style investors will inevitably put profits before patients – something private equity denies.

LifePoint’s Willamette Valley Medical Center in McMinnville, Oregon.

In April, LifePoint Chief Executive Officer David Dill and other hospital officials met with President Donald Trump. Dill urged Trump to keep helping hospitals, noting that LifePoint’s medical centers tend to be in the middle of the country, “smaller communities, which I know are communities very important to you,’’ according to a transcript of the meeting.

“Rural hospitals are a very important part of the infrastructure in this country and also treating the uninsured and the Medicaid population as well,’’ Dill said.

Trump pointed out that the hospitals didn’t appear to be in the “hot spots.” Dill acknowledged they were handling only “a couple hundred Covid patients.” (The company said it has now cared for almost 20,000.)

In April, the month the government started distributing assistance, LifePoint borrowed $680 million in the capital markets. It also had access to $900 million in cash and an $800 million credit line, according to Moody’s Investors Service. 

By Apollo’s own account, LifePoint was doing just fine when the pandemic struck. In fact, it was thriving – and looking to expand. As of March 31, shortly before LifePoint got taxpayer dollars, Apollo’s investors were on track to double their money, internal documents show. On paper, they were sitting on a gain of more than $800 million.

“Independent hospital systems have greater difficulty weathering prolonged periods of financial stress,’’ Apollo wrote to its investors in May. “A  consolidation strategy will provide meaningful upside for Apollo funds’ investment.’’

Apollo said the crisis represented an opportunity: “The coronavirus pandemic will serve as a catalyst for additional M&A opportunities given the attractive scale and overall position of the LifePoint platform.”

Apollo is one of three private equity firms whose hospitals, as a group, received a total of about $2.5 billion in bailout grants and loans, according to an analysis of the latest federal records. That’s a conservative figure because it doesn’t count the many smaller sums distributed to subsidiaries.
LifePoint’s UP Health System-Marquette in Michigan.
Steward Health Care, a hospital  chain financed by private equity firm Cerberus Capital Management, received $675 million in grants and loans. In May, Cerberus transferred ownership of Steward to a group of doctors in exchange for a note that can be converted into a 37.5% equity stake. Another hospital company, Prospect Medical Holdings, owned by private equity firm Leonard Green & Partners, took in $375 million.
Apollo’s LifePoint hospitals received the most: $941 million in subsidized loans and $535 million in outright grants. 
While Democratic lawmakers have said such firms could have instead tapped their own cash stockpiles, private equity industry representatives have said they have a duty to manage that money in the best interests of their investors, which include public pension plans.
A Wall Street Giant Tapped $1.5 Billion in Federal Aid for Its Hospitals - Bloomberg

Apollo built its rural hospital empire through the acquisition of three regional hospital chains in 2015, 2016 and 2018.  Apollo Investment Fund VIII LP owns 76% of LifePoint, which is based in Brentwood, Tennessee.

Even though many individual rural hospitals are struggling, Apollo says it can operate them more efficiently by merging them together. LifePoint now owns 88 hospitals in 29 states. It had almost $9 billion of annual revenue last year.

Apollo says that on its watch, the chain has improved its infrastructure and technology, recruited care providers and built new centers.

And for rural hospitals, Apollo argues, bigger is better.

“We continue to believe that rural hospitals can benefit from being part of a larger well-run system that enables access to greater resources and infrastructure for improved patient care,” the Apollo spokesperson said.

 

 

Despite turbulence in H1, no avalanche of health systems downgrades

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https://www.healthcaredive.com/news/despite-turbulence-in-h1-no-avalanche-of-health-systems-downgrades/584353/?utm_source=Sailthru&utm_medium=email&utm_campaign=Issue:%202020-09-02%20Healthcare%20Dive%20%5Bissue:29437%5D&utm_term=Healthcare%20Dive

“It’s new territory, which is why we’re taking that measured approach on rating actions,” Suzie Desai, senior director at S&P, said.

The healthcare sector has been bruised from the novel coronavirus and the effects are likely to linger for years, but the first half of 2020 has not resulted in an avalanche of hospital and health system downgrades.

At the outset of the pandemic, some hospitals warned of dire financial pressures as they burned through cash while revenue plunged. In response, the federal government unleashed $175 billion in bailout funds to help prop up the sector as providers battled the effects of the virus.

Still, across all of public finance — which includes hospitals — the second quarter saw downgrades outpacing upgrades for the first time since the second quarter of 2017.

S&P characterized the second quarter as a “historic low” for upgrades across its entire portfolio of public finance credits.

“While only partially driven by the coronavirus, the second quarter was the first since Q2 2017 with the number of downgrades surpassing upgrades and by the largest margin since Q3 2014,” according to a recent Moody’s Investors Service report.

Through the first six months of this year, Moody’s has recorded 164 downgrades throughout public finance and, more specifically, 27 downgrades among the nonprofit healthcare entities it rates.

By comparison, Fitch Ratings has recorded 14 nonprofit hospital and health system downgrades through July and just two upgrades, both of which occurred before COVID-19 hit.

“Is this a massive amount of rating changes? By no means,” Kevin Holloran, senior director of U.S. Public Finance for Fitch, said of the first half of 2020 for healthcare.

Also through July, S&P Global recorded 22 downgrades among nonprofit acute care hospitals and health systems, significantly outpacing the six healthcare upgrades recorded over the same period.

“It’s new territory, which is why we’re taking that measured approach on rating actions,” Suzie Desai, senior director at S&P, said.

Still, other parts of the economy lead healthcare in terms of downgrades. State and local governments and the housing sector are outpacing the healthcare sector in terms of downgrades, according to S&P.

Virus has not ‘wiped out the healthcare sector’

Earlier this year when the pandemic hit the U.S., some made dire predictions about the novel coronavirus and its potential effect on the healthcare sector.

Reports from the ratings agencies warned of the potential for rising covenant violations and an outlook for the second quarter that would result in the “worst on record,“ one Fitch analyst said during a webinar in May.

That was likely “too broad of a brushstroke,” Holloran said. “It has not come in and wiped out the healthcare sector,” he said. He attributes that in part to the billions in financial aid that the federal government earmarked for providers.

Though, what it has revealed is the gaps between the strongest and weakest systems, and that the disparities are only likely to widen, S&P analysts said during a recent webinar.

The nonprofit hospitals and health systems pegged with a downgrade have tended to be smaller in size in terms of scale, lower-rated already and light on cash, Holloran said.

Still, some of the larger health systems were downgraded in the first half of the year by either one of the three rating agencies, including Sutter Health, Bon Secours Mercy Health, Geisinger, University of Pittsburgh Medical Center and Care New England.

“This is something that individual management of a hospital couldn’t control,” said Rick Gundling, senior vice president of Healthcare Financial Management Association, which has members from small and large organizations. “It wasn’t a bad strategy — that goes into a downgrade. This happened to everybody.”

Deteriorating payer mix

Looking forward, some analysts say they’re more concerned about the long-term effects for hospitals and health systems that were brought on by the downturn in the economy and the virus.

One major concern is the potential shift in payer mix for providers.

As millions of people lose their job they risk losing their employer-sponsored health insurance. They may transition to another private insurer, Medicaid or go uninsured.

For providers, commercial coverage typically reimburses at higher rates than government-sponsored coverage such as Medicare and Medicaid. Treating a greater share of privately insured patients is highly prized.

If providers experience a decline in the share of their privately insured patients and see a growth in patients covered with government-sponsored plans, it’s likely to put a squeeze on margins.

The shift also poses a serious strain for states, and ultimately providers. States are facing a potential influx of Medicaid members at the same time state budgets are under tremendous financial pressure. It raises concerns about whether states will cut rates to their Medicaid programs, which ultimately affects providers.

Some states have already started to re-examine and slash rates, including Ohio.

 

 

 

 

Hospitals face closure as $100B in Medicare loans come due

Posted on by • Posted in Bankruptcy, Cash, Cash Management, Cash Reserves, Center for Medicare and Medicaid Services (CMS), Critical Access Hospitals, Economic Crisis, Economic Stimulus, Financially Distressed, Hospital, Hospital Industry, Medicare, Medicare Advance Payments, Rural Health, Rural Hospital, The CARES Act • Leave a comment

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HCA posts a billion-dollar profit, bolstered by CARES Act funds - MedCity News

CMS accelerated payments to hospitals and other healthcare providers at the beginning of the COVID-19 pandemic to help temporarily relieve financial strain. It’s time to begin repaying the Medicare loans but that isn’t possible for some rural hospitals, according to NPR. 

CMS expanded the Accelerated and Advance Payment Program in late March to help offset financial damage caused by the COVID-19 pandemic. CMS announced April 26 that it was reevaluating pending and new applications for advance payments due to the availability of funds under the Coronavirus Aid, Relief and Economic Security Act. As of May, CMS had paid out $100 billion in advance payments, the bulk of which went to hospitals. 

Hospitals and other healthcare providers are required to start repaying the Medicare loans this month. Most hospitals will have one year from the date the first loan payment was made to repay the loans, according to Kaiser Family Foundation.

Ozarks Community Hospital, 25-bed critical access hospital in Gravette, Ark., is one of the hospitals that applied for and accepted the Medicare loans. The hospital also received grants made available under the CARES Act, which do not have to be repaid.

CEO Paul Taylor said Ozarks Community Hospital’s revenue is still constrained, and he doesn’t know how it will pay back its $8 million Medicare loan. Payments for new Medicare claims will be offset to repay the loans, but losing those payments could force the hospital to close, Mr. Taylor told NPR.

“If I get no relief and they take the money … we won’t still be open,” he said.

Ozarks Community Hospital is one of more than 850 critical access hospitals in rural areas that received Medicare loans, according to NPR. Given the shaky financial footing of many rural hospitals before the pandemic, the strain of having Medicare payments withheld could be enough to force others to shut down. 

Before the pandemic, more than 600 rural hospitals across the U.S. were vulnerable to closure, according to an estimate from iVantage Health Analytics, a firm that compiles a hospital strength index based on data about financial stability, patients and quality indicators.

If the financial pressures tied to the pandemic force any of those hospitals to shut down, they’ll join the list of 131 rural hospitals that have closed over the past decade, according to the Cecil G. Sheps Center for Health Services Research.

 

 

 

 

Sutter posts $857M loss in H1 on investment, operational declines

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California's Sutter Health reaps rewards from investments in ...

Dive Brief:

  • Sutter Health had a staggering loss of $857 million in the first half of the year as the Northern California health was bruised by the pandemic. That’s almost a $1.4 billion drop in income compared to the first half of last year, a plummet Sutter management largely blamed on investment and operational losses in its latest financial filing posted Thursday.
  • The virus shuttered operations for a period of time, driving Sutter’s revenue down 8% to $6.1 billion during the first half of the year. Expenses climbed nearly 2%, contributing to an operating loss of $557 million.
  • Still, the nonprofit noted it did experience a significant rebound in its investments in the second quarter after weathering the devastating effects of the first quarter.

Dive Insight:

Sutter joins other major nonprofit health systems in posting net losses for the first half of the year despite receiving hundreds of millions in federal grants to help offset headwinds brought on by the pandemic.

Recently, both Renton, Washington-based Providence and Arizona-based Banner Health posted losses for the first half of the year — $538 million and $267 million, respectively. Dampened revenue and downturns in investments contributed to their losses.

The federal government has funneled billions of dollars to providers across the country in an attempt to help them weather the downturn in patient volumes. Sutter noted in its filing that it’s received $400 million in federal relief funds so far, though that wasn’t enough to push the health system back into the black. Sutter operates 29 hospitals and enjoys a large presence in Northern California.

Sutter reported fewer admissions and emergency room visits in the second quarter compared to the prior-year period, down about 10% and 19%, respectively.

The pandemic was quick to wreak havoc on Sutter’s finances during the first quarter, in which the system reported an operating loss of $236 million and a net loss of almost $1.1 billion.

The coronavirus is also serving as a drag on its ratings. In April, two of the three big ratings agencies downgraded Sutter Health’s rating.

In part, Moody’s attributed the downgrade to Sutter’s weaker profitability profile. In its rationale, Moody’s said, “Following a second year of weaker results, margins in 2020 are likely to remain under pressure due to COVID-19 related disruptions, ongoing performance challenges at some of Sutter’s facilities, and continued reimbursement pressure.”

Also weighing on Moody’s rating is the $575 million settlement expected to be paid this year to resolve antitrust issues. Last year, the health system averted a trial over antitrust concerns after agreeing to a settlement with California regulators. Sutter agreed it would end any contracts that require all of its facilities to be in-network or none of them and cap out-of-network charges, among other stipulations.

 

 

 

 

Revenues and volumes have fallen ‘off a cliff’ hospital executives tell American Hospital Association

Posted on by • Posted in American Hospital Association (AHA), American Medical Association (AMA), American Nurses Association, Cash, Cash Management, Coronavirus, Deferred Healthcare, Economic Crisis, Economic Stimulus, Elective Procedures, Elective Surgery, Emergency Care, Health System, Hospital, Hospital Industry, Liquidity, Net Income, Nonoperating Income, Operating Expense Reduction, Operating Expenses, Operating Income, Operating Margin, Operating Performance, Operating Revenue, The CARES Act • Leave a comment

https://www.healthcarefinancenews.com/news/aha-releases-case-studies-us-hospitals-and-health-systems-highlighting-financial-challenges

Revenues and volumes have fallen 'off a cliff' hospital executives ...

Eight health systems in AHA case study are asking Congress for more relief funding.

The American Hospital Association has released eight case studies from hospitals and health systems across the country that highlight how systems of different shapes and sizes are reacting to the financial challenges posed by COVID-19.

The case studies include Kindred Healthcare and TIRR Memorial Hermann in Houston; AdventHealth Central Florida Division in Orlando, Florida; the Loretto Hospital in Chicago; Kittitas Valley Healthcare in Ellensburg, Washington; Washington Regional Medical Center in Fayetteville, Arkansas; Banner Health in Phoenix; UR Medicine Thompson Health in Canandaigua, New York; and the Queen’s Health Systems and the Queen’s Medical Center in Honolulu.

Across the board, every case study revealed that hospitals and health systems are asking Congress for more relief funding.

“We are begging for more assistance and more help because we can’t keep moving forward,” said Michael Stapleton, the president and CEO of UR Medicine Thompson Health in New York.

WHAT’S THE IMPACT?

In Texas, the state with the third most COVID-19 cases, Kindred Healthcare and TIRR Memorial Hermann have begun to rely on inpatient rehabilitation facilities and long-term acute care hospitals to treat COVID-19-positive and medically complex recovering COVID-19 patients.

“In particular, as communities and hospitals struggled to meet ICU capacity needs, these hospitals stepped forward to take care of COVID-19-positive patients and others to help provide beds for more COVID-19-positive patients,” the case study said.

However, even with assistance from local facilities, post-acute care providers have incurred increased costs to prepare for and treat COVID-19-positive patients and complex post-COVID-19 patients.

“When you look at lost revenue and volumes, and the additional costs of ramping up to prepare for COVID-19, whether it’s personal protective equipment, respiratory systems, medications or facility infrastructure changes, there are significant dollars associated with that,” said Jerry Ashworth, the senior vice president and CEO at TIRR Memorial Hermann.

AdventHealth in Florida has taken financial hits from declining elective procedures and purchasing personal protective equipment. The company says it has lost $263 million since the start of the pandemic and has spent $254 million sourcing PPE.

“Florida is in the middle of the crisis,” said Todd Goodman, division chief financial officer of AdventHealth. “Our current COVID numbers are four times higher than the peak that we had back in April. We are bringing in higher-priced nurses and staff from other parts of the nation, because of a rapid increase in inpatient census. We are in a different place today than we were even six weeks ago.”

COVID-19 has disproportionately affected communities of color across the country, but especially in Chicago, where 30% of the population is Black. Forty-six percent of all COVID-19 cases and 57% of all deaths are Black people.

Despite having 70% of its admissions being related to COVID-19, the Loretto Hospital in Chicago has not received any funds from the Coronavirus Aid, Relief, and Economic Security Act hot spot distribution.

“Our COVID-19 unit is full and has been for the last three months; we’re now at 296 COVID-19 patients [on July 16] and yet we’ve not received any of the COVID-19 high impact ‘hot spot’ payments,” said George Miller, the president and CEO of the Loretto Hospital. “We got the Small Business Administration loan to help keep our team members employed.”

Kittitas Valley Healthcare in Washington was among the first in the country to feel the impact of COVID-19. The rural delivery system and its critical access hospital postponed elective surgeries and many other nonessential services in response.

“Our revenues and volumes fell off a cliff,” said Julie Petersen, the CEO of Kittitas Valley Healthcare. “Our orthopedics programs, our GI [gastrointestinal] programs and cataract surgeries evaporated.”

Now, the hospital is off its original 2020 net revenue projections by $8.4 million.

After seeing a 12% rise in COVID-19 cases over a two-week period in Fayetteville, Arkansas, the Washington Regional Medical Center had 96% of its 40 intensive care unit beds occupied, a 20-bed COVID-19 ICU was completely full, and 298 of the facility’s 315 adult beds were occupied.

Taking care of these patients put the health system in a financial crisis. Its net patient revenue declined by $14 million in April. It furloughed 350 of its 3,300 employees and reduced the hours of 360 full-time workers, according to Larry Shackelford, the president and CEO of Washington Regional Medical Center.

On July 12, Banner Health in Arizona had more than 1,500 inpatients who either tested COVID-positive or are suspected of having COVID-19, representing 45% of the COVID-19 inpatient hospitalizations in the state, according to Dr. Marjorie Bessel, the chief clinical officer at Banner Health.

Banner expects operating losses of $500 million for 2020, compared to its initial expectations, with expected revenue losses approaching $1 billion for the year, according to the case study.

By mid-March, New York had 15 times more COVID-19 cases than any other state, according to the case study. Like the rest of the state, UR Medicine Thompson Health shut down many of its services, resulting in “insurmountable” financial losses and staff furloughs.

“Our first projection was a $17 million loss through the year-end,” Stapleton said. “We lost half of March, all of April and half of May. The hospital has received only $3.1 million from the CARES Act tranche payments.”

Although the Queen’s Health Systems and the Queen’s Medical Center in Hawaii are starting to reschedule appointments, surgeries and procedures that had been delayed by COVID-19, patients aren’t coming back as anticipated.

“Even with the pent-up demand for elective procedures, minimally invasive and even short-stay procedures are still down by about 18%. We are seeing our in-person clinic visits down by about 14%, and the emergency department (ED) is the one that surprised us the most – down by 38%,” said Jason Chang, president of the Queen’s Medical Center and chief operating officer of the Queen’s Health Systems and the Queen’s Medical Center.

The systems lost $127 million between March and May, according to Chang. He says the projected losses are about $60 million for 2021, but could reach $300 million if Hawaii experiences a second wave of COVID-19.

THE LARGER TREND

The AHA has cited $323 billion in losses industry-wide due to the ongoing COVID-19 pandemic, with U.S. hospitals anticipating about $120 billion in losses from July to December alone.

It was joined by the American Nurses Association and the American Medical Association to ask Congress to provide additional funding to the original $100 billion from the CARES Act. In a letter sent in July, the organizations asked for “at least an additional $100 billion to the emergency relief fund to provide direct funding to front line health care personnel and providers, including nurses, doctors, hospitals and health systems, to continue to respond to this pandemic.”