ThedaCare physicians and advanced practice clinicians will take a 10 percent pay cut to help reduce the Appleton, Wis.-based health system’s financial hit due to the COVID-19 pandemic, the organization confirmed to The Post-Crescent.
The physicians and advanced practice clinicians — which include physician assistants and nurse practitioners — will see their pay reduced beginning in June, Cassandra Wallace, a ThedaCare spokesperson, told the newspaper.
ThedaCare is projecting a $70 million loss this year after temporarily postponing revenue-generating elective surgeries and nonurgent clinic visits due to the COVID-19 pandemic. The health system began a phased approach to reinstate services last month, but the recommended suspension and the costs associated with COVID-19 preparation resulted in net revenue dropping 40 percent in April, ThedaCare said in a June 4 news release.
The salary reductions are part of the health system’s plan to narrow its projected loss to $30 million, said Imran A. Andrabi, MD, ThedaCare president and CEO.
Dr. Andrabi has also agreed to take a 50 percent pay cut, and other executive leaders will take a 40 percent cut to improve the health system’s financial picture.
Additionally, ThedaCare leaders will not be eligible for incentive compensation for 2020, the health system said.
The health system’s plan does not include mass layoffs.
Banner Health warned of a major spike of COVID-19 cases over the past few weeks in Arizona as the state opened back up and eased social distancing guidelines.
Arizona’s COVID-19 hospitalizations are rapidly increasing and raising potential capacity concerns, the system said.
“As of June 4, there were 1,234 hospitalized COVID-19 patients,” the system said in a statement. “About 50% of those patients are hospitalized in Banner Health facilities.”
Banner officials said its ICUs have gotten very busy, and the system has been transferring patients and resources to avoid putting stress on one particular hospital. Banner Health operates 28 hospitals across six states, including several hospitals in Arizona. The health system’s update comes as other hospital systems are eyeing a potential resurgence of COVID-19 cases as states reopen their economies after months of stay-at-home orders.
“If these trends continue, Banner will soon need to exercise surge planning and flex up to 125% bed capacity,” the system warned.
The number of Banner Health patients in Arizona on a ventilator has also increased over the past few weeks, from 41 on May 22 to nearly 120 on June 3.
The system also attributed the increase in COVID-19 cases to a relaxation of the state’s stay-at-home order, which expired May 15.
The cases started to spike two weeks after the end of the order, which is the likely incubation period for the virus.
Banner emphasized that the public needs to continue certain behaviors like wearing a mask in public and social distancing in order to ensure capacity isn’t overwhelmed.
Hospitals not only have to worry about the prospects of a second surge of the virus in the fall but also a wave of pent-up demand for healthcare services put off due to the pandemic.
Banner Health, like all health systems, canceled or postponed elective procedures at the onset of the pandemic back in March. But health systems are taking small steps to resume elective procedures.
Banner Health has also taken steps to preserve its personal protective equipment (PPE), which has been in short supply across the healthcare industry throughout the pandemic. Banner was one of 15 healthcare systems to buy a minority stake in PPE domestic manufacturer Prestige Ameritech in the hopes of shoring up a supply chain that is traditionally reliant on overseas manufacturers.
Nurses at 15 HCA hospitals represented by National Nurses United protested last week, saying the for-profit hospital chain threatened layoffs. Nurses took to the sidewalks outside of their hospitals with signs, after they said they were told to expect cuts to benefits and staff if they didn’t give up negotiated wage increases.
In an emailed statement, HCA said it had no plans for layoffs.
“The facts are that non-represented colleagues across the HCA Healthcare enterprise are taking pay reductions and non-represented colleagues are giving up wage increases this year. HCA Healthcare has made these tough decisions in order to preserve jobs. To be equitable to all of our colleagues across the enterprise, we recently reached out to unions, with the hope that during this time of crisis, they would support the same measures for our unionized employees to minimize the impact on your compensation and employment status. … If the (National Nurses Organizing Committee) and/or (Service Employees International Union) reject our proposal, colleagues represented by these unions will no longer be eligible for continued pandemic pay, may be subject to layoffs and may face other benefit changes.”
Nurses interviewed by MedCity News said they were asked to give up other benefits.
Zoe Schmidt, a registered nurse who works at Research Medical Center in Kansas City, said they were also asked to forego their 401(k) matching for the year and shift differential pay, or increased compensation for nurses that work night and weekend shifts.
“We’ve been fighting back against that. At my hospital, it does seem like they’ve backed down on wage freezes and 401(k) matching (changes),” she said.
Though Schmidt hasn’t seen any evidence of impending layoffs, she said she was worried about staffing changes that could push the number of patients past four or five per nurse for the medical surgical unit where she works.
“We’re not overstaffed by any means,” she said.
Juan Anchondo, who has worked as an RN for 16 years at Las Palmas Medical Center in El Paso, Texas, said nurses were told to expect 10% layoffs.
“The way they word it, it sounds like layoffs are imminent,” he said. “They wouldn’t be specific to which departments or which hospital.”
In the last two weeks, as the hospital started to reopen, he said his medical-surgical unit quickly expanded from 20 beds to 26 beds.
“We were barely keeping up with what we could with 20 beds available,” he said. “All of a sudden, when we had four nurses scheduled on the floor, all of a sudden four nurses, is that enough to cover 26 beds?”
Like other hospital systems, HCA has seen reduced volumes during the Covid-19 pandemic, with canceled elective procedures and patients nervous to come into the hospital.
The health system’s revenue was up during the first quarter to $12.86 billion, but its profits were down nearly 45% from the same period in 2019, for a total of $581 million.
For employees affected by low patient volumes, HCA said it had been offering them pandemic pay, giving them 70% of their base pay for hours not worked.
To offset its losses, the company cut salaries for 11,000 of its corporate staff, suspended stock buybacks and its dividend, and delayed certain capital projects.
During the company’s first quarter earnings call, CFO Bill Rutherford said the company had received $700 million in CARES Act payments, as well as roughly $4 billion in accelerated Medicare payments and $75 million per month in deferred social security payroll taxes.
In an emailed statement, HCA said the negotiations with unions had solely been about their wage increases and the health system’s pandemic pay program.
“At a time when hundreds of hospitals across the country are laying off and furloughing employees, HCA Healthcare has not laid off or furloughed a single caregiver due to the pandemic and we hope to avoid doing so in the future,” the company said in an emailed statement. “Throughout the pandemic, our goal has been to protect our colleagues’ jobs and to continue the pandemic pay program for all, including those represented by labor unions. But the unions’ rigid position on wage increases means we will likely have to make other adjustments that will affect the colleagues they represent.”
National Nurses United represents 10,000 HCA nurses across six states.
After months of lock down, hospitals are eager to get patients back for routine care and elective procedures.
An executive at a Palm Beach hospital stands between a box of surgical masks and a Purell dispenser.
“We understand you haven’t been inside our hospitals for some time,” she says to the camera. The executive is delivering her line for a promotional video intended to get people back to hospitals after almost three months of avoiding the place at all costs.
Moments later, the film crew records her chatting with a vascular surgeon in an idled operating room, who soothingly reassures that a hospital is the cleanest place to be outside your home. “The hospital is safer than the grocery store,” the doctor says.
The video published on YouTube in mid-May is part of a marketing campaign by Tenet Healthcare, which operates 65 hospitals and about 250 ambulatory surgery centers. It’s one attempt to solve a problem the entire health-care industry faces: Most patients vanished when Covid-19 swept the country.
Billions in Losses
Much of routine health care came to a halt in March as hospitals cleared space for an expected wave of Covid-19 patients and authorities ordered a halt to surgeries and other procedures that could be postponed. The decline in volume has clobbered hospital finances, with the industry estimating it is losing $50 billion a month.
Emergency visits dropped by 42% in four weeks in April compared to the same period last year, the Centers for Disease Control reported June 3. The number of U.S. patients getting hospital care dropped by more than half in late March and early April compared to 2019, according to data from Strata Decision Technology, which provides software to hospitals.
Some of that rebounded modestly in May as distancing rules eased, but hospital volume is nowhere near pre-Covid levels. With the pandemic ongoing and many states still confirming hundreds of new cases daily, patients are hesitating to rush back to hospitals.
“The main thing that really is a gating factor at this point is patient comfort,” Tenet President and Chief Operating Officer Saumya Sutaria said at a recent virtual conference with investors. Tenet declined interview requests.
Free Masks
To counter the public’s fears, hospitals publicize what they’re doing to keep patients safe. They’re handing out masks at the door and spacing out chairs in waiting rooms. They’re steering Covid-19 patients to dedicated sites and testing staff regularly.
Hospitals need to show patients that their facilities are safe. At Catholic hospital chain Trinity Health, that includes moving patients through “Covid-free” zones with separate doors, elevators and waiting areas.
“We can put all of the outreach and marketing in place, but it’s only as effective as the people who execute those strategies,” said Julie Spencer Washington, Trinity’s chief marketing and communications officer.
The question for the entire industry is how quickly patients come back. The answer will depend on a constellation of related variables, including how reluctant people are to resume care, and the course of the pandemic. Future surges could force hospitals to shut down regular care again — and spook patients further.
Hospitals and doctors are going to have to do as much as they can as fast as they can until they can’t anymore,” said Lisa Bielamowicz, co-founder of consultancy Gist Healthcare.
Many patients, on the other hand, are in no rush. “They’re waiting and watching rather than pulling the trigger and going to see the doctor like they would have in the past,” Bielamowicz said.
The calculation for the health-care industry is different than for many other service businesses resuming operations. A hospital procedure or even a check-up is more intimate than a meal out.
For procedures that require in-patient rehab stints for recovery, the havoc Covid-19 has brought to nursing homes adds another layer of concern. “Those places seem like deathtraps now, so it’s much harder to bring back those patients because you need to find an alternative way for them to rehab,” Bielamowicz said.
And the biggest consumers of health care are the elderly and the chronically ill, the very people Covid-19 most threatens. “From personal discussions with my patients, the older and more co-morbidities that any individual has, the more nervous they are about returning,” said Shauna Gulley, chief clinical officer at Centura Health, which has hospitals in Colorado and Kansas.
Patients with serious ongoing needs like cancer treatment or emergencies like heart attacks and strokes have continued to get care. And many medical problems resolve on their own. The decline in those visits – for a migraine headache, for example – reduces providers’ revenue but may not harm patients in the long-term.
While people often go to the emergency room for needs better treated in other settings, now the concern is the opposite: That true medical emergencies will be neglected.
Ascension, the nation’s largest Catholic hospital chain, has purchased billboards that say “Don’t delay ER care.” On hospital websites and social media posts, Tenet facilities reminded patients that “Emergencies Can’t wait. We’re Open & Safe.”
Deferred Care
Doctors fear that some patients will defer needed care too long, allowing progressive conditions to deteriorate. Clinicians at Maimonides Medical Center in Brooklyn, New York, have seen patients arrive sicker because they didn’t come earlier, said Ken Gibbs, the hospital’s CEO.
“There are unmet needs, I think that’s clear,” he said. “And I think the data on that will emerge, but it will take time.”
Maimonides treated 471 Covid patients at the peak on April 9, Gibbs said, and still had about 100 in late May. The hospital has applied for a waiver from New York State to resume elective surgeries, which are still on hold in New York City.
Some hospitals are preparing for a lasting dent in their revenue. For years, health economists have pointed to waste in the health-care system, with the estimated cost of unnecessary treatments in the hundreds of billions of dollars. Covid-19 may demonstrate that patients are willing to forego some of that care or opt for more conservative treatment.
People who had delayed back surgeries, for example, may now decide that doing physical therapy at home is good enough, said Marvin O’Quinn, president and chief operating officer at CommonSpirit Health, a large Catholic hospital system.
“We’ve all talked about too much intervention in health care in the past,” he said. “I think we’ll see a new normal in terms of what patients want to do and what doctors want to do, and we will have to adjust to that.”
The American Red Cross said its blood supply levels have been cut in half as social-distancing and stay-at-home orders have caused fewer people to donate, The New York Times reported.
Across the country, collection drives at offices, schools and churches have been canceled to comply with stay-at-home orders.
For a while, the drop in donations weren’t critical because supply and demand fell at the same time, as hospitals canceled most elective surgeries and far fewer people were getting injured in car crashes and other accidents.
But now that hospitals are resuming elective surgeries and many people are leaving the house more often, the number of donations has not increased, according to the Times.
Chris Hrouda, president of biomedical services for the American Red Cross, which collects about 40 percent of the country’s blood donations, told the Times that there’s been a “staggering” drop in blood supply. The Red Cross usually has enough blood to meet the country’s needs for five days; it currently has less than two days’ worth.
On May 31, the Red Cross had to stop sending hospitals their full blood orders and could fill only 75 percent of them, Mr. Hrouda told the Times. He said that if donations don’t increase in the next week or two, the Red Cross will have to start filling just half of hospitals’ requested blood orders.
“It puts hospitals and doctors in the precarious position of deciding who gets blood,” Mr. Hrouda told the Times.
Hospitals are performing even more surgeries than before the pandemic to get through backlogs of operations.
Brian Gannon, chief executive of the Gulf Coast Regional Blood Center in Texas, said he told about 100 hospitals that get blood from his center to slow down their elective procedures, according to the Times.
Insurers will be issuing a total of about $2.7 billion in refunds, estimates the Kaiser Family Foundation.
The COVID-19 pandemic’s postponement of elective surgeries and regular care has created a surplus in revenue for insurers due to lower spending.
Health plans are mandated to spend at least 80% of their revenues on medical care. When they make more than that, they have to give money back to the purchasers.
Insurers are doing this now, rather than later, according to the Advisory Board’s practice manager Rachel Sokol, who spoke during the company’s weekly meeting on the impact of COVID-19 to payers.
Insurers want to create immediate value for members, instead of waiting for 2021, she said.
“That’s why we’re seeing the premium discounts now,” Sokol said.
Among those insurers refunding money, UnitedHealthcare said it would provide more than $1.5 billion in initial assistance, including customer premium credits, because its members have been unable to access routine or planned care due to the COVID-19 pandemic.
UnitedHealthcare has seen a lower volume of medical care being delivered than it anticipated when it set premiums.
Commercial fully insured individual and employer customers will get credits ranging from 5% to 20% – depending upon the specific plan – which will be applied to premium billings in June.
WHY THIS MATTERS
Insurers are mandated to provide refunds, but also they want to motivate members to return for regular care, to prevent more costly and complex outcomes later.
While hospitals have taken a financial hit from COVID-19, the major health insurers have shown minimal impact.
In fact, insurers could see a benefit to earnings in 2020 as medical services decline, according to Moody’s Investors Service.
THE LARGER TREND
Under the Affordable Care Act, insurers are required to rebate some premiums to their customers if medical claims fall short of expectations, based on a three-year average of medical costs.
The Medical Loss Ratio of the Affordable Care Act requires insurance companies that cover individuals and small businesses to spend at least 80% of their premium income on healthcare claims and quality improvement, leaving the remaining 20% for administration, marketing, and profit.
The MLR threshold is higher for large group insured plans, which must spend at least 85% of premium dollars on healthcare and quality improvement, according to the Kaiser Family Foundation.
Insurers may either issue rebates in the form of a premium credit or a check payment and, in the case of people with employer coverage, the rebate may be shared between the employer and the employee, Kaiser said.
Using preliminary data reported by insurers to state regulators and compiled by Market Farrah Associates, Kaiser estimates that insurers will be issuing a total of about $2.7 billion across all markets – nearly doubling the previous record high of $1.4 billion last year.
Insurers need to project the future cost of delayed elective procedures and total expenses of COVID-19 care.
While health insurers have saved money by the cancellation of elective surgeries and many are currently refunding excess revenue under the Medical Loss Ratio, premiums for the 2021 plan year are still in question.
There is a lot of uncertainty, America’s Health Insurance Plans said. Without comprehensive data, insurers are working to estimate 2021 healthcare costs and must base their rates on projected costs, AHIP explained in an infographic.
It is too soon to know what the real healthcare costs of COVID-19 will be. Also, delayed elective and non-urgent care will likely be delivered – and paid for – later.
That care could be more complex and costly because it was delayed, AHIP said.
WHY THIS MATTERS
Insurers are working to meet state deadlines to file 2021 premiums in the individual market.
THE LARGER TREND
Federal law requires insurers to spend 80-85 cents of every premium dollar on medical services and care. The rest, under the Medical Loss Ratio, may go towards administrative expenses, regulatory costs, federal and state taxes, customer service and other expenses.
The COVID-19 pandemic’s postponement of elective surgeries and regular care has created a surplus in revenue for insurers due to lower spending, which many are refunding now.
ON THE RECORD
“COVID-19 has had a very real impact on the economic, physical, and mental health of millions of Americans,” said Jeanette Thornton, senior vice president of Product, Employer, and Commercial Policy at AHIP. “Our members are working through this uncertainty to strengthen access to affordable care as the fight against the coronavirus continues. COVID-19 dramatically changed the healthcare landscape–in 2020 and for years to come.
UPMC reported a small operating loss but higher revenues for the quarter ending March 31. The Pittsburgh-based regional healthcare system attributed the red ink to the COVID-19 pandemic and suggested the next quarter could be even tougher.
The healthcare services division “experienced significant reductions in patient volumes during the last two weeks” of the quarter, representing about a $150 million loss in revenue for that time period, UPMC said in its unaudited financial statement posted Friday. The system said it is receiving about $255 million from the Coronavirus, Aid, Relief, and Economic Security Act.
UPMC’s health insurance plan also saw increased revenue due to a significant rise in its membership, but its operating income dropped by 56%.
Dive Insight:
UPMC, which operates 40 hospitals in Pennsylvania, New York and Ohio, has been growing steadily in recent years. However, its growth in the first quarter collided head-on with the COVID-19 pandemic.
The system posted a $41 million operating loss on revenues of $5.5 billion, according to the financial report. For the first quarter of 2019, it reported an operating profit of $44 million on revenue of $5.1 billion. The system did not disclose its net numbers.
Investment losses reached nearly $800,000, compared to a gain of more than $224,000 in the prior-year period.
While overall outpatient revenue increased 1% during the quarter, revenue from physician services was down 3% while hospital admissions and observations dropped by 4%.
UPMC is the latest nonprofit healthcare provider to report losses blamed on COVID-19, although its numbers are not as big as those reported by Kaiser Permanente and CommonSpirit Health, both of which reported quarterly losses exceeding $1 billion apiece.
UPMC did note in a statement that its business was moving back toward normal in recent weeks.
“During the COVID-19 crisis, UPMC’s leaders, scientists, clinicians and front-line workers throughout our … system were prepared to care for the potential surge of COVID-positive patients while also safely providing essential, life-saving care to our non-COVID patients,” Edward Karlovich, UPMC’s interim chief financial officer, said in a statement. “However, many patients who had scheduled surgeries and procedures before the crisis postponed their care. With assurances that all our facilities are safe for all patients and staff, we are seeing our patients returning for their essential care that had been postponed and our current volumes are beginning to approach near-normal levels.”
The system also noted that it was sitting on $7 billion in cash and liquid investments. It reported 99 days cash on hand.
UPMC’s insurance division remained in the black, but was under strain. Its operating income was $39 million — compared to $89 million for the first quarter of 2019. However, membership grew by 7% during the quarter to 3.8 million enrollees.
Though hospital volumes are expected to remain below pre-pandemic levels for quite some time, rebounding outpatient visits seem to be outpacing those for inpatient care or emergency department visits, according to a Transunion Healthcare survey of more than 500 hospitals.
During the week of May 10-16, outpatient visits were down 31% and emergency visits were down 40% compared to pre-COVID-19 levels. Inpatient volumes were down 20% and continue to trend upward, though at a slower rate than outpatient or ER visit volumes. Outpatient visits plunged between April 5 and 11, hitting a bottom of 64% down from typical volume.
Baby boomers (born between 1944 and 1964) and the what the report calls the silent generation (born before 1944) are returning to ERs faster than younger generations. Millennials (born between 1980 and 1994) and Generation Z (born between 1995 and 2002) patients, however, are driving positive trends in inpatient and outpatient rebounds.
Dive Insight:
The report echos several others suggesting patients are still cautious about returning to the hospital and other care settings. The Kaiser Family Foundation found that the pandemic has forced nearly half of patients to postpone medical care. About 32% of those who have postponed care said they would get the service in the next three months and 10% said they will do so in four months to a year.
The overall sluggish outlook led Transunion to suggest patient volumes may not be restored to pre-pandemic levels soon enough to both sustain operational and clinical functions and repay advanced Medicare payments that many systems large and small have taken advantage of from CMS.
Because of the demographic trends, systems may have greater success scheduling appointments by checking in first with younger generations, the report suggests.
“We think as providers are beginning to really drive their patient engagement strategies that it’s best if they start reaching out to them, because it’s likely they’ll be willing to re-enter the care setting,” John Yount, vice president for TransUnion Healthcare, told Healthcare Dive.
Providers are taking steps to ease patient fears upon returning to medical settings by implementing temperature checks, spacing out waiting rooms to allow for social distancing and taking other safety measures.
But a sluggish recovery is still likely as patients plan to continue delaying care, especially older adults who are at higher risk for COVID-19 and in some states have been told to continue following stay at home orders.
The slowest return to growth in emergency room visits raises concerns that patients who need emergency care may be avoiding hospital settings due to COVID-19 fears, according to the report.
Older patients are leading the pack in returning to ERs, and they also experienced the largest decline in inpatient volumes from March 1-7 and April 5-11.
Comparatively, younger generations had smaller declines in visit activity overall and are returning to care settings faster, Yount said.
“These deferrals will have implications for both patients and providers — high-acuity and chronically-ill patients risk waiting too long to seek care, and a continued reduction in visit volume will further amplify existing financial challenges for hospitals,” David Wojczynski, president of TransUnion Healthcare, said in a statement.
Despite rebounding patient volumes at some health systems, an overall slow and bumpy recovery period is most likely to last into next year, according to analysts with S&P Global Ratings. Operating margins will remain below historic levels for the rest of 2020 and into early 2021.
The ratings agency took negative action against companies in health sub-sectors facing more sudden and dramatic declines in business and now face less certain paths to recovery than others, such as dental companies, along with physical therapy and ambulatory surgery centers.
Medical staffing and physician groups were also downgraded or had their outlooks revised, due to major declines in emergency room and doctors office visits coupled with declining demand for anesthesia and radiology services related to delayed surgeries.
Dive Insight:
Federal relief grants are helping offset major financial losses for some health systems in the short-term, but factors like a second surge causing another total lockdown, rising unemployment and hesitancy from patients as they return to medical settings make long-term prospects unpredictable.
S&P Global Ratings said in a report this week that it took 36 negative actions in health services companies during the pandemic. The most affected sub-sector was dental companies. It also changed outlooks on ambulatory surgery centers given significant volume declines.
Hospitals and home healthcare were rated at moderate to high financial risk, though analysts expect those businesses to recover faster due to the more essential nature of their services, according to the report. And in the short-term, government relief funds will help bolster hospitals’ liquidity as they attempt to return to normal operations and recover from steep losses.
Delayed elective care that’s just restarting in some states led most hospitals to the financial fallout. But even hospitals treating a large number of COVID-19 patients will be hurt, as these patients are expensive to treat due to higher supply and labor costs, the report said.
It also found that nonprofit and for-profit operators could fare differently in their financial recoveries. Non-profit hospitals generally have larger cash reserves than for profit systems, which rely instead almost exclusively on cash flow and borrowings for liquidity.
Providers are relying specifically on the Coronavirus Aid, Relief and Economic Security Act which allocated $100 billion for providers that they don’t have to pay back, though there has been some criticism about how the money was distributed and whether it advantages some providers over others.
A Kaiser Family Foundation report found that CARES funding tends to favor for profit, higher margin hospitals with a higher mix of private payer revenue compared to those that rely on government payers such as Medicare and Medicaid.
Other legislation to help financially struggling health systems include advanced Medicare payments in the form of loans that must be paid back roughly four months after they are received.
The U.S. House of Representatives also passed a $3 trillion bill dubbed the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act that allocates $100 billion for provider reimbursement and creates special enrollment periods for Medicare and Affordable Care Act plans, though the Trump administration said it’s too soon for additional relief funding.
Lab companies were put in the moderate risk category, and seeing a “40% decline in lab tests net of COVID testing,” S&P said.
Still, it said despite the drop in overall testing for LabCorp and Quest Diagnostics, S&P predicted “their services to become even more important, and for their services to recover reasonably well as testing related to the pandemic continues to grow and as medical procedures and physician visits ramp-up through the rest of the year and into 2021.”
HENRY KOTULA 