Elective procedures are in a strange place at the moment. When the COVID-19 pandemic started to ramp up in the U.S., many of the nation’s hospitals decided to temporarily cancel elective surgeries and procedures, instead dedicating the majority of their resources to treating coronavirus patients. Some hospitals have resumed these surgeries; others resumed them and re-cancelled them; and still others are wondering when they can resume them at all.
In a recent HIMSS20 digital presentation, Reenita Das, a senior vice president and partner at Frost and Sullivan, said that during the pandemic, plastic surgery activity declined by 100%, ENT surgeries declined by 79%, cardiovascular surgeries declined by 53% and neurosurgery surgeries declined by 57%.
It’s hard to overstate the financial impact this is likely to have on hospitals’ bottom lines. Just this week, American Hospital Association President and CEO Rick Pollack, pulling from Kaufman Hall data, said the cancellation of elective surgeries is among the factors contributing to a likely industry-wide loss of $120 billion from July to December alone. When including data from earlier in the pandemic, the losses are expected to be in the vicinity of $323 billion, and half of the nation’s hospitals are expected to be in the red by the end of the year.
Doug Wolfe, cofounder and managing partner of Miami-based law firm Wolfe Pincavage, said this has amounted to a “double-whammy” for hospitals, because on top of elective procedures being cancelled, the money healthcare facilities received from the federal Coronavirus Aid, Relief, and Economic Security Act was an advance on future Medicare payments – which is coming due. While hospitals perform fewer procedures, they will now have to start paying that money back.
All hospitals are hurting, but some are in a more precarious position than others.
“Some hospital systems have had more cash on hand and more liquidity to withstand some of the financial pressure some systems are facing,” said Wolfe. “Traditionally, the smaller hospital systems in the healthcare climate we face today have faced a lot more financial pressure. They’re not able to control costs the same way as a big system. The smaller hospitals and systems were hurting to begin with.”
LOWER REVENUE, HIGHER COSTS
Some hospitals, especially ones in hot spots, are seeing a surge in COVID-19 patients. While this has kept frontline healthcare workers scrambling to care for scores of sick Americans, COVID-19 treatments are not reimbursed at the same level as surgeries. Hospital capacity is being stretched with less lucrative services.
“Some hospitals may be filling up right now, but they’re filling up with lower-reimbursing volume,” said Wolfe. “Inpatient stuff is lower reimbursement. It’s really the perfect storm for hospitals.”
John Haupert, CEO of Grady Health in Atlanta, Georgia, said this week that COVID-19 has had about a $115 million negative impact on Grady’s bottom line. Some $70 million of that is related to the reduction in the number of elective surgeries performed, as well as dips in emergency department and ambulatory visits.
During one week in March, Grady saw a 50% reduction in surgeries and a 38% reduction in ER visits. The system is almost back to even in terms of elective and essential surgeries, but due to a COVID-19 surge currently taking place in Georgia, it has had to suspend those services once again. ER visits have only come back about halfway from that initial 38% dip, and the system is currently operating at 105% occupancy.
“Part of what we’re seeing there is reluctance from patients to come to hospitals or seek services,” said Haupert. “Many have significantly exacerbated chronic disease conditions.”
Patient hesitation has been an ongoing problem, as has the associated cost of treating coronavirus patients, said Wolfe.
“When they were ramping up to resume the elective stuff, there was a problem getting patients comfortable,” he said. “And the other thing was that the cost of treating patients in this environment has gone up. They’ve put up plexiglass everywhere, they have more wiping-down procedures, and all of these things add cost and time. They need to add more time between procedures so they can clean everything … so they’re able to do less, and it costs more to do less. Even when elective procedures do resume, it’s not going back to the way it was.”
Most hospitals have adjusted their costs to mitigate some of the financial hit. Even some larger systems, such as 92-hospital nonprofit Trinity Health in Michigan, have taken to measures such as laying off and furloughing workers and scaling back working hours for some of its staff. At the top of the month, Trinity announced another round of layoffs and furloughs – in addition to the 2,500 furloughs it announced in April – citing a projected $2 billion in revenue losses in fiscal year 2021, which began on June 1.
Hospitals are at the mercy of the market at the moment, and Wolfe anticipates there could be an uptick in mergers and consolidation as organizations look to partner with less cash-strapped entities.
“Whether reorganization will work remains to be seen, but there will definitely be a fallout from this,” he said.
One in every five workers is now collecting unemployment benefits as the country struggles to get the COVID-19 outbreak under control. A recent Families USA study estimates a quarter of the 21.9M workers that were furloughed or laid off between February and May lost their health insurance. And the payer mix will continue to change as the pandemic wears on.
The graphic below highlights a study from consultancy Oliver Wyman, looking at the impact of rising unemployment (at 15, 20 and 30 percent) on insurance coverage. With each five to ten percent rise in unemployment, the commercially insured population decreases by three to five percent. Those who lose employer-sponsored insurance either remain uninsured, buy coverage on the Obamacare marketplaces, or qualify for Medicaid.
Surprisingly, Washington State and California are reporting little to no enrollment growth in Medicaid programs thus far. Experts point to lack of outreach and consumer awareness as key contributors to the slow growth—but Medicaid enrollment will likely begin to rise quickly in coming months as temporary furloughs convert to more permanent layoffs.
The right side of the graphic spotlights the growing number of uninsured individuals in those states with the highest uninsured rates. The previous record for the largest increase in uninsured adults was between 2008 and 2009, when nearly 4M lost coverage. The current pandemic-driven increase has crushed that record by 39 percent.
On average, states are seeing uninsured populations increase by two percent, with some as high as five percent. And the two states with the highest uninsured rates, Florida and Texas, are also dealing with the largest surge in COVID-19 cases and deaths. The ranks of the uninsured will continue to climb as states reimpose shutdowns, government assistance ends, and layoffs grow.
“What you’re seeing is that, as the economy slows, the pace of claims picks back up — which really puts at risk the monthly jobs report over the next few months,” said Joseph Brusuelas, the chief economist at RSM. “The July numbers are going to be tenuous, but it’s August that I’m worried about.”
The number of workers continually claiming unemployment insurance went down, however, a statistic that lags by a week, to 16.1 million workers for the week ending July 11, from 17.4 million for the week ending July 4.
In addition to the 1.4 million seeking unemployment nationwide last week, another 980,000 new Pandemic Unemployment Assistance claims were filed, the benefits offered to self-employed and gig workers.
The numbers come as millions of unemployed workers are about to exhaust stimulus payments from two federal benefits programs whose expiration economists have warned could have dire effects on the economy.
Brusuelas said the numbers are a sign that the burst of economic activity that marked the country’s reopening has waned, and that shrinking consumer demand remained a significant risk for businesses and the workers they employ across the country.
“We are going to see a much slower pace of growth the reset of the year,” he said. “While we still are retaining our call for a swoosh-shaped recovery, one has to acknowledge a w-shaped recovery is possible.”
The extra $600 a week in unemployment benefits that the federal government has offered to supplement more modest state unemployment benefits will end this week, as lawmakers wrangle over legislation that could extend it.
Including the new benefits available to gig workers and the self-employed, more than 53 million applications have been filed for some form of unemployment insurance during the pandemic.
Nationwide, state and local government leaders are warning of major budget cuts as a result of the pandemic. One state – New York – even referred to the magnitude of its cuts as having “no precedent in modern times.”
Declining revenue combined with unexpected expenditures and requirements to balance budgets means state and local governments need to cut spending and possibly raise taxes or dip into reserve funds to cover the hundreds of billions of dollars lost by state and local government over the next two to three years because of the pandemic.
Without more federal aid or access to other sources of money (like reserve funds or borrowing), government officials have made it clear: Budget cuts will be happening in the coming years.
And while specifics are not yet available in all cases, those cuts have already included reducing the number of state and local jobs – from firefighters to garbage collectors to librarians – and slashing spending for education, social services and roads and bridges.
In some states, agencies have been directed to cut their budget as much as 15% or 20% – a tough challenge as most states prepared budgets for a new fiscal year that began July 1.
As a scholar of public administration who researches how governments spend money, here are the ways state and local governments have reduced spending to close the budget gap.
State and local governments laid off or furloughed 1.5 million workers in April and May.
They are also reducing spending on employees. According to surveys, government workers are feeling personal financial strain as many state and local governments have cut merit raises and regular salary increases, frozen hiring, reduced salaries and cut seasonal employees.
Washington state, for example, cut both merit raises and instituted furloughs.
A survey from the National League of Cities shows 32% of cities will have to furlough or lay off employees and 41% have hiring freezes in place or planned as a result of the pandemic.
Employment reductions have met some resistance. In Nevada, for example, a state worker union filed a complaint against the governor to the state’s labor relations board for violating a collective bargaining statute by not negotiating on furloughs and salary freezes.
Most of the employee cuts have been made in education. Teachers, classroom aids, administrators, staff, maintenance crews, bus drivers and other school employees have seen salary cuts and layoffs.
The job loss has hurt public employees beyond education, too: librarians, garbage collectors, counselors, social workers, police officers, firefighters, doctors, nurses, health aides, park rangers, maintenance crews, administrative assistants and others have been affected.
Residents also face the consequences of these cuts: They can’t get ahold of staff in the city’s water and sewer departments to talk about their bill; they can’t use the internet at the library to look for jobs; their children can’t get needed services in school.
Most of these cuts have been labeled temporary, but with the extensions to stay-at-home orders and a mostly closed economy, it will be some time before these employees are back to work.
As another way to reduce costs quickly, a National League of Cities survey shows 65% of the municipalities surveyed are stopping temporarily, or completely, capital expenditure and infrastructure projects like roads, bridges, buildings, water systems or parking garages.
In New York City, there is a US$2.3 billion proposed cut to the capital budget, a fund that supports large, multiyear investments from sidewalk and road maintenance, school buildings, senior centers, fire trucks, sewers, playgrounds, to park upkeep. There are potentially serious consequences for residents. For example, New York housing advocates are concerned that these cuts will hurt plans for 21,000 affordable homes.
Suspending these big money projects will save the government money in the short term. But it will potentially harm the struggling economy, since both public and private sectors benefit from better roads, bridges, schools and water systems and the jobs these projects create.
Delaying maintenance also has consequences for the deteriorating infrastructure in the U.S. The costs of unaddressed repairs could increase future costs. It can cost more to replace a crumbling building than it does to fix one in better repair.
In many states, the new budgets severely cut their aid to local governments, which will lead to large local cuts in education – both K-12 and higher education – as well as social programs, transportation, health care and other areas.
New York state’s budget proposes that part of its fiscal year 2021 budget shortfall will be balanced by $8.2 billion in reductions in aid to localities. This is the state where the cuts were referred to in the budget as “not seen in modern times.” This money is normally spent on many important services that residents need everyday –mass transit, adult and elderly care, mental health support, substance abuse programs, school programs like special education, children’s health insurance and more. Lacking any of these support services can be devastating to a person, especially in this difficult time.
As teachers and administrators figure out how to teach both online and in person, they and their schools will need more money – not less – to meet students’ needs.
Libraries, which provide services to many communities, from free computer use to after-school programs for children, will have to cut back. They may have fewer workers, be open for fewer hours and not offer as many programs to the public.
Parks may not be maintained, broken playground equipment may stay that way, and workers may not repave paths and mow lawns. Completely separate from activists’ calls to shift police funding to other priorities, police departments’ budgets may be slashed just for lack of cash to pay the officers. Similar cuts to firefighters and ambulance workers may mean poorly equipped responders take longer to arrive on a scene and have less training to deal with the emergency.
To keep with developing public safety standards, more maintenance staff and materials will be needed to clean and sanitize schools, courtrooms, auditoriums, correctional facilities, metro stations, buses and other public spaces. Strained budgets and employees will make it harder to complete these new essential tasks throughout the day.
To avoid deeper cuts, state and local government officials are trying a host of strategies including borrowing money, using rainy day funds, increasing revenue by raising tax rates or creating new taxes or fees, ending tax exemptions and using federal aid as legally allowed.
Colorado was able to hold its budget to only a 3% reduction, relying largely on one-time emergency reserve funds. Delaware managed to maintain its budget and avoided layoffs largely through using money set aside in a reserve account.
Nobody knows how long the pandemic, or its economic effects, will last.
In the worst-case scenario, budget officials are prepared to make steeper cuts in the coming months if more assistance does not come from the federal government or the economy does not recover quickly enough to restore the flow of money that governments need to operate.
More than 700 nurses who walked off the job for two weeks approved a new contract July 20 with Amita Health Saint Joseph Medical Center Joliet (Ill.), hospital and union officials confirmed to Becker’s.
The nurses are represented by the Illinois Nurses Association, and both sides had been negotiating a new contract since early spring. Nurses had worked without a contract since May 9 and went on strike July 4.
Pay and benefits have been key sticking points at the bargaining table. Additionally, the Illinois Nurses Association had claimed the hospital was not adequately addressing staffing issues.
The new contract includes agreements by the hospital to improve the staffing guidelines on certain units before Dec. 31 and to meet and confer with the union by that date to improve staffing throughout the facility, the union said in a news release. Health insurance premium contributions were also capped at 25 percent for full-time nurses and 35 percent for part-time nurses, the union said.
“While a majority of nurses voted for this contract, there are still many nurses who want to see more progress on safe staffing,” said Pat Meade, RN, one of the lead union negotiators. “We will continue the fight for safe staffing through enforcement of our contract and in Springfield.”
In an emailed statement to Becker’s, hospital spokesperson Tim Nelson said Amita Health is pleased with the agreement and called it “fair and just for all involved.”
The hospital hired temporary nurses from an outside agency to fill in during the strike.
Mr. Nelson said the hospital’s nurses will return to work July 22 for their regularly scheduled shifts.
For months now, American workers, families and small businesses have been saying they can’t keep up their socially distanced lives for much longer. We’ve now arrived at “much longer” — and the pandemic isn’t going away anytime soon.
The big picture: The relief policies and stopgap measures that we cobbled together to get us through the toughest weeks worked for a while, but they’re starting to crumble just as cases are spiking in the majority of states.
Next week, the extra $600 per week in expanded unemployment benefits will expire. And there’s no indication that Congress has reached a consensus on extending this assistance or providing anything in its place.
Expect more furloughs and layoffs as more small businesses are pushed off the pandemic cliff.
And the question of whether schools will reopen looms.
The bottom line: “It’s the uncertainty that is anxiety-inducing,” says Despard. “If you give people a time horizon and say, ‘Look you have to get through these next 8 weeks of extreme shutdown,’ they’ll do it. Now it’s like, ‘How much longer?'”
When COVID-19 cases swelled in New York and other northern states this spring, Erik Andrews, a rapid response nurse at Riverside Community Hospital in southern California, thought his hospital should have enough time to prepare for the worst.
Instead, he said his hospital faced staffing cuts and a lack of adequate personal protective equipment that led around 600 of its nurses to strike for 10 days starting in late June, just before negotiating a new contract with the hospital and its owner, Nashville-based HCA Healthcare.
“To feel like you were just put out there on the front lines with as minimal support necessary was incredibly disheartening,” Andrews said. Two employees at RCH have died from COVID-19, according to SEIU Local 121RN, the union representing them.
A spokesperson for HCA told Healthcare Dive the “strike has very little to do with the best interest of their members and everything to do with contract negotiations.”
Across the country, the pandemic is exacerbating labor tensions with nurses and other healthcare workers, leading to a string of disputes around what health systems are doing to keep front-line staff safe. The workers’ main concerns are adequate staffing and PPE. Ongoing or upcoming contract negotiations could boost their leverage.
But many of the systems that employ these workers are themselves stressed in a number of ways, above all financially, after months of delayed elective procedures and depleted volumes. Many have instituted furloughs and layoffs or other workforce reduction measures.
Striking a balance between doing union action at hospitals and continuing care for patients could be an ongoing challenge, Patricia Campos-Medina, co-director of New York State AFL-CIO/Cornell Union Leadership Institute.
“The nurses association has been very active since the beginning of the crisis, demanding PPE and doing internal activities in their hospitals demanding proper procedures,” Campos-Medina said. “They are front-line workers, so they have to be thoughtful in how they continue to provide care but also protect themselves and their patients.”
At Prime Healthcare’s Encino Hospital Medical Center, just outside Los Angeles, medical staff voted to unionize July 5, a week after the hospital laid off about half of its staff, including its entire clinical lab team, according to SEIU Local 121RN, which now represents those workers.
One of the first things the newly formed union will fight is “the unjust layoffs of their colleagues,” it said in a statement.
A Prime Healthcare spokesperson told Healthcare Dive 25 positions were cut. “These Encino positions were not part of front-line care and involved departments such as HR, food services, and lab services,” the system said.
Hospital service workers elsewhere who already have bargaining rights are also bringing attention to what they deem as staffing and safety issues.
In Chicago, workers at Loretto Hospital voted to authorize a strike Thursday. Those workers include patient care technicians, emergency room technicians, mental health staff and dietary and housekeeping staff, according to SEIU Healthcare Illinois, the union that represents them. They’ve been bargaining with hospital management for a new contract since December and plan to go on strike July 20.
Loretto Hospital is a safety-net facility, catering primarily to “Black and Brown West Side communities plagued with disproportionate numbers of COVID illnesses and deaths in recent months,” the union said.
The “Strike For Black Lives” is in response to “management’s failure to bargain in good faith on critical issues impacting the safety and well-being of both workers and patients — including poverty level wages and short staffing,” according to the union.
A Loretto spokesperson told Healthcare Dive the system is hopeful that continuing negotiations will bring an agreement, though it’s “planning as if a strike is eminent and considering the best options to continue to provide healthcare services to our community.”
Meanwhile in Joliet, Illinois, more than 700 nurses at Amita St. Joseph Medical Center went on strike July 4.
The Illinois Nurses Association which represents Amita nurses, cited ongoing concerns about staff and patient safety during the pandemic, namely adequate PPE, nurse-to-patient ratios and sick pay, they want addressed in the next contract. They are currently bargaining for a new one, and said negotiations stalled. The duration of the strike is still unclear.
However, a hospital spokesperson told Healthcare Dive, “Negotiations have been ongoing with proposals and counter proposals exchanged.”
The hospital’s most recent proposal “was not accepted, but negotiations will continue,” the system said.
INA is also upset with Amita’s recruitment of out-of-state nurses to replace striking ones during the COVID-19 pandemic.
It sent a letter to the Illinois Department of Financial and Professional Regulation, asserting the hospital used “emergency permits that are intended only for responding to the pandemic for purposes of aiding the hospital in a labor dispute.”
To address the financial fallout from the COVID-19 pandemic, hospitals across the nation are looking to cut costs by implementing furloughs, layoffs or pay cuts.
U.S. hospitals are expected to lose $323.1 billion this year due to the pandemic, according to a recent report from the American Hospital Association. The total includes $120.5 billion in financial losses that hospitals are projected to see from July through December, as well as $202.6 billion in losses that were projected between March and June. The losses were largely due to a lower patient volume after canceling elective procedures.
Although Congress allocated $175 billion to help hospitals offset some of the revenue losses and expense increases to prepare for the pandemic, hospitals have said it is not enough.
Nearly 270 hospitals and health systems have furloughed workers in response to the pandemic and several others have implemented layoffs.
Below are 12 hospitals and health systems that have announced layoffs since June 1:
1. Trinity Health furloughs, lays off another 1,000 workers
Trinity Health, a 92-hospital system based in Livonia, Mich., will lay off and reduce work schedules of 1,000 employees.
2. Ohio children’s hospital cuts jobs
Dayton (Ohio) Children’s Hospital said it has cut jobs to help offset financial losses due to the COVID-19 pandemic.
3. Munson Healthcare to cut 25 leadership positions
Traverse City, Mich.-based Munson Healthcare cut 25 leadership positions to help offset financial losses amid the COVID-19 pandemic.
4. Erlanger lays off 93 nonclinical employees
Chattanooga, Tenn.-based Erlanger Health System has cut 93 nonclinical positions to help offset financial damage from the COVID-19 pandemic. The layoffs come after the health system cut 11 leadership positions June 12, including the CEO of Erlanger Western Carolina Hospital in Murphy, N.C., and made staff and pay cuts in March.
5. Michigan Medicine to lay off 738 employees by end of June
Ann Arbor-based Michigan Medicine planned to eliminate 738 positions by the end of June amid financial challenges from the COVID-19 pandemic.
6. Pennsylvania health system cuts 10% of workforce amid pandemic losses
As part of a restructuring effort to cut pandemic-related losses, State College, Pa.-based Mount Nittany Health System plans to lay off 10 percent of its workforce, or about 250 employees.
7. TriHealth eliminates 440 positions to cut costs
Cincinnati-based TriHealth cut 440 positions as part of a plan to trim at least $140 million in expenditures this year.
8. Layoffs hit U of Kansas Health System
The University of Kansas Health System St. Francis Campus in Topeka laid off employees after previously implementing furloughs.
9. Tower Health to cut 1,000 jobs
Citing a $212 million loss in revenue through May due to the COVID-19 pandemic, West Reading, Pa.-based Tower Health plans to cut 1,000 jobs.
10. Colorado hospital cuts 22 positions
Parkview Medical Center in Pueblo, Colo., eliminated 22 positions in response to the COVID-19 pandemic.
11. Arkansas Children’s cuts 42 positions
Little Rock-based Arkansas Children’s Hospital said it is eliminating 42 jobs as part of cost-savings measures in response to the COVID-19 pandemic.
12. North Carolina health system cuts 10% of workforce, closes clinics
Citing a financial hit from the COVID-19 pandemic, Lumberton, N.C.-based Southeastern Health will permanently close several clinics, cut 10 percent of its workforce and reduce executive pay.