Category Archives: Financially Distressed

U.S. passes 4 million coronavirus cases as pace of new infections roughly doubles

Posted on by • Posted in 2020 Election Issues, Asymptomatic Transmission, Blame, Centers for Disease Control & Prevention (CDC), Clinical Testing, Contact Tracing, Coronavirus, Credibility, Crisis, Crisis Management, Economic Crisis, Economic Recovery, Economy Reopening, Employee Benefits, Employee Furlough, Employee Hiring Freeze, Employee Layoffs, Employee Pay Cuts, Employer-Based Health Insurance, Evidence-based Leadership, Evidence-Based Plan, Evidence-Based Policy, False Hope, False Narrative, Financial Pressure, Financial Viability, Financially Distressed, Health Insurance Coverage Adequacy, Health Policy, Honesty, Infection Control, Infection Control Plan, Infectious Virus, Integrity, Job, Job Loss, Job Market, Job Search, Job Security, Leadership Decentralized, Misinformation, Mislead, Misleading, Mistrust, Mixed Message, Mortality, National Strategy, Pandemic, Personal Protective Equipment (PPE), Public Health, Public Safety, Quarantine, Recession, School Reopening, Scientists, Social Distancing, Trust, Truth, Underinsured, Unemployment, Unemployment Insurance, Uninsured, Wishful Thinking • Leave a comment

https://www.washingtonpost.com/politics/us-passes-4-million-coronavirus-cases-as-pace-of-new-infections-roughly-doubles/2020/07/23/d0125192-cd02-11ea-b0e3-d55bda07d66a_story.html?utm_campaign=wp_main&utm_medium=social&utm_source=facebook&fbclid=IwAR3Ve5MnHiStJnPO_mzkc1c2sHE2EM6QOG-2HochFPBmJe6hnyvcmqEVQ4U

The United States on Thursday passed the grim milestone of 4 million confirmed coronavirus infections, and President Trump announced he was canceling the public celebration of his nomination for a second term, as institutions from schools to airlines to Major League Baseball wrestled with the consequences of a pandemic still far from under control.

The rapid spread of the virus this summer is striking, taking just 15 days to go from 3 million confirmed cases to 4 million. By comparison, the increase from 1 million cases to 2 million spanned 45 days from April 28 to June 11, and the leap to 3 million then took 27 days.

Trump’s cancellation of the in-person portion of the Republican National Convention planned for next month in Jacksonville, Fla., represented a remarkable reversal. He had insisted for months on a made-for-television spectacle that would have packed people close together in a state that is now an epicenter of the resurgent pandemic.

On Thursday, he conceded that was not going to work. “The timing for this event is not right,” Trump said during the latest of somber, solo White House briefings this week. “It’s just not right with what’s been happening.”

Florida reported 173 deaths on Thursday, its highest single-day count of new deaths, and also reported more than 10,200 new coronavirus cases.

In a scathing statement blaming the surge of new cases on Trump’s “failure to care,” presumptive Democratic nominee Joe Biden said the president “quit on this country and waved the white flag of surrender.”

Meanwhile, nearly every public health metric suggests America is badly losing its fight against the virus.

Positivity rates have reached alarming levels in numerous states, hospitalizations are soaring, and more than 1,100 new coronavirus deaths were reported across the United States on Wednesday, marking the first time since May 29 that the daily count exceeded that number, according to Washington Post tracking.

The rolling seven-day average of infections has doubled in less than a month, reaching more than 66,000 new cases per day Wednesday. The U.S. death toll now exceeds 141,000.

As a result, many businesses appear to be pulling back after their attempts to resume more normal operations proved premature, and an additional 1.4 million American workers filed for unemployment benefits last week. It was the first time since March that new claims rose. Another 980,000 new Pandemic Unemployment Assistance claims — the benefits offered to self-employed and gig workers — were also filed.

Congress, meanwhile, struggled to confront the crisis. Senate Republicans killed Trump’s payroll tax cut proposal on Thursday, widening an unusual rift with the White House over the cost and contents of the latest national coronavirus relief package.

Senate Majority Leader Mitch McConnell (R-Ky.) had planned to roll out a $1 trillion GOP bill Thursday morning, but that was canceled amid the intraparty conflicts.

Administration officials then floated a piecemeal approach, involving several different aid bills, but ran into opposition from lawmakers in both parties.

Trump’s briefing Thursday afternoon, his third of the week, reflected an effort to increase popular support for his management of the coronavirus outbreak, which even many of his allies have criticized. About 2 out of 3 Americans disapprove of Trump’s handling of the pandemic, a new poll found.

Trump dismissed or played down the risk of the virus for months after it had begun spreading in the United States and has been a self-described cheerleader for rapid reopening of businesses and schools shuttered to help slow its spread.

The survey of 1,057 adults in the United States, conducted by the Associated Press-NORC Center for Public Affairs Research, also showed that 3 out of 4 Americans, including a majority of Republicans, support mandatory face coverings when people are outside their own homes.

Democrats overwhelmingly favor mask mandates, at 89 percent. The majority of Republicans — 59 percent — also support them.

Ninety-five percent of Democrats and 75 percent of Republicans say they wear face coverings when leaving home. Overall, more Americans — 86 percent — are wearing masks compared with in May, when 73 percent were doing so.

Trump resisted wearing a mask in public until earlier this month, despite calls to set a good example from the top. He now calls it patriotic to wear a mask, though he still does not wear one consistently and says people should decide for themselves. Trump carries a black-cloth version in his pocket, which he says is sufficient for those instances when he is close to people who have not been screened for the virus.

Trump’s shift may reflect a growing consensus in favor of masks, although it is not clear that opposition to them has ebbed among some of the president’s strongest political supporters.

The business community is struggling, too. American Airlines and Southwest Airlines posted big quarterly losses between April and July in their earnings reports released Thursday, projecting that travel demand will not rebound anytime soon.

In American’s second quarter, revenue dropped more than 86 percent, to $1.6 billion, from nearly $12 billion a year ago, according to a Securities and Exchange Commission filing. The company posted a net loss of nearly $2.1 billion, attributing it to stay-at-home orders, border closures and travel restrictions.

“As a result, we have experienced an unprecedented decline in the demand for air travel, which has resulted in a material deterioration in our revenues,” the company said in the earnings report. “While the length and severity of the reduction in demand due to Covid-19 is uncertain, we expect our results of operations for the remainder of 2020 to be severely impacted.”

Southwest posted revenue of $1 billion in its second quarter, an almost 83 percent dip compared with a year ago. The company also posted a net loss of $915 million.

Trump also took a small step back from his insistence that schools should open on time this fall, conceding instead that some schools might need to delay in-person learning. Many school districts have already announced that decision.

Trump has been critical of guidance from the Centers for Disease Control and Prevention, saying it made it too tough for schools to reopen, and promised new guidelines would be issued. On Thursday, the CDC released several documents emphasizing the benefits of in-person school, in line with Trump’s messaging. Some of the guidance was written by White House officials rather than experts at the CDC, people familiar with the process said. They spoke on the condition of anonymity to discuss internal decision-making.

The new guidelines for school administrators mention precautions outlined in previous documents, but they appear to drop specific reference to keeping students six feet apart — something many schools find almost impossible to do if they are fully reopened. This document also suggests that schools consider closing only if there is “substantial, uncontrolled transmission” of the virus, and not necessarily even then.

Florida Gov. Ron DeSantis (R) echoed Trump in making a case for students to return to classrooms, despite the state’s teachers union suing over an order forcing schools to fully reopen. Meanwhile, a new poll showed that most parents would prefer to delay the start of in-person school.

During an appearance on “Fox & Friends,” DeSantis said that schoolchildren are “by far at the least risk for coronavirus, thankfully.”

“We also know they play the smallest role by far in transmission of the virus, and yet they’ve really been asked to shoulder the brunt of our control measures,” said DeSantis, a close Trump ally who had volunteered his state for the Republican convention next month.

DeSantis said that the “evidence-based decision” is for all parents to have the option of in-class instruction for their children if they choose. He said those who are not comfortable with sending their children back to school could continue distance learning.

The role children play in spreading the virus is still being studied, with experts saying that results are not definitive. A South Korean study found that children over the age of 10 were as likely to transmit the virus as adults, while those under 10 were less likely to spread it.

Deborah Birx, the White House coronavirus response coordinator, said Wednesday on Fox News that the United States is launching a study of its own, adding that the data “really needs to be confirmed here.”

Among the most visible American institutions searching for a path forward is the sports industry. Major League Baseball began a pandemic-shortened season on Thursday, playing in empty stadiums amid questions about whether the sport can make it through October without having to abort. It is as much a science experiment as a championship pursuit.

Players are prohibited from spitting or high-fiving. Foul balls that wind up in the stands will remain there.

Anthony S. Fauci, the nation’s leading infectious-disease expert, threw out the first pitch for the Washington Nationals home opener against the New York Yankees. Nationals star outfielder Juan Soto tested positive for the coronavirus on Thursday and missed the game.

Meanwhile, Japan marked a year’s delay of the Olympic Games on Thursday. Tokyo was to host the 2020 Summer Olympics starting Friday. A 15-minute ceremony in Tokyo’s newly built $1.4 billion Olympic Stadium started the countdown to the delayed games, now set to begin on July 23, 2021. The city also marked a new daily record in reported cases on Thursday, with 366.

A poll this week by Japan’s Kyodo News Agency found that fewer than 1 in 4 people in Japan even want to host the games anymore. One-third of respondents said the games should be canceled, while 36 percent expressed interest in postponing them for more than a year.

 

 

 

Why COVID-19’s biggest impact on healthcare may not be until 2022

Posted on by • Posted in 2020 Election Issues, ACA, Business Model, Cost Management, Cost Reduction, Cost Shifting, Employer-Based Health Insurance, Financial Pressure, Financial Viability, Financially Distressed, Health Insurance Coverage Adequacy, Health Policy, Health System, Hospital, Hospital Industry, Job, Job Loss, Job Market, Medicaid, Medicare, Pandemic, Underinsured, Unemployment, Unemployment Insurance, Uninsured • Leave a comment

https://www.healthcaredive.com/news/why-covid-19s-biggest-impact-on-healthcare-may-not-be-until-2022/582129/

This perfect storm of a shift in payer mix, the impending insolvency of Medicare and the inability of states to absorb the growing costs of Medicaid represent a tsunami of challenges.

With COVID-19 there has been unprecedented stress placed upon the healthcare system. The human and financial toll of the current crisis has been extraordinary. Yet, little attention has been focused on the impact of this virus on the viability of our healthcare financing system.

Three significant shifts in healthcare financing are occurring as a result of the pandemic’s economic impact. First, as a result of job losses, there will be a shift in commercial insurance to government-funded insurance programs. Second, revenue for funding Medicare, based on payroll taxes, will be significantly decreased. Finally, states will have less tax revenue to pay for Medicaid, threatening the viability of this program as well.

More than 30 million Americans have filed for unemployment since the start of the COVID-19 pandemic. According to a recent report, about 27 million people may lose their employer-sponsored insurance. 

This will result in millions of people seeking coverage through Medicaid programs, the individual marketplace or simply becoming uninsured. Healthcare providers have relied upon margins from commercial insurance to offset costs from poorer reimbursing government funded programs and uncompensated care.

With more than 156 million Americans receiving employer sponsored insurance at the start of this year, and given recent projected job losses, providers may see a 17% shift in payer mix. The reliance on commercial insurance and cost shifting has become a necessary way for providers to financially sustain operations. 

With a 35% margin with commercial insurance compared to Medicare, a 17% shift in payer mix on a trillion dollar spend would result in a substantial reduction in financial resources available to hospitals.

Almost half of healthcare expenditures already come from government programs. Medicare, the largest of these programs, is principally supported by taxes on payroll and social security benefits. With COVID-related job losses there will be a corresponding reduction in payroll tax revenues to the Medicare system. Reports from the Congressional Research Service submitted to Congress in May, with data used prior to COVID-19, projected that Medicare would become insolvent in 2026.

Analyses performed show that there will be a gap in Medicare revenues during the next three years (from the pre-COVID projections) of close to $150 billion. The result is that Medicare will become insolvent as early as 2022. Even by applying more conservative projections, such as recovering all job losses by the end of 2020 and payroll tax revenue holding steady at pre-COVID levels, Medicare still becomes insolvent in 2023.

State revenues, too, will be under real pressure with reduced tax revenues resulting from the current economic downturn. Medicaid programs are supported in part by federal funds, but also from general funds from the state. 
On average, states are projecting about a 10% reduction in revenues in 2020, rising to almost a 25% reduction in 2021. Even without considering the growth in Medicaid enrollment hitting states, this reduced tax revenue will make sustaining current Medicaid program funding increasingly difficult.

This perfect storm of a shift in payer mix, the impending insolvency of Medicare by 2022 and the inability of states to absorb the growing costs of Medicaid represent a tsunami of challenges for the health system. Looking at this new reality, it is clear that our system for financing healthcare is severely broken and we must identify solutions to sustain access to medical care for our citizens.

This will be a challenge of a generation and we will need strength, courage and bold ideas to get through this. Pandemics have a way of changing a society’s political, economic and sociologic outlooks, and COVID-19 will be no different. 

 

 

 

California AG conditionally approves $350M sale of nonprofit to Prime Healthcare

Posted on by • Posted in Access & Quality of Healthcare, Asset Purchase Agreement, Bankruptcy, Collective Bargaining, Community, Community Benefit, Community Hospital, Financial Pressure, Financial Viability, Financially Distressed, For-Profit, Health System, Hospital, Hospital Industry, Labor Union, Market Consolidation, Market Power, Mergers & Acquisitions, State Attorney Generals (AG) • Leave a comment

https://www.healthcarefinancenews.com/news/california-ag-conditionally-approves-350m-sale-st-francis-medical-center-prime-healthcare

Prime Healthcare, CEO Prem Reddy settle false-claims suit for $65M

Prime will acquire St. Francis for a net of $350 million, with a $200 million base cash price and $60 million for accounts receivable.

California Attorney General Xavier Becerra has conditionally approved Verity Health’s application to transfer ownership of St. Francis Medical Center to Prime Healthcare. The Attorney General’s decision follows an earlier decision by the U.S. Bankruptcy Court of the Central District of California granting Verity’s request to reject the existing collective bargaining agreements which impose legacy cost structures that it said contributed to bankruptcy.

Becerra noted that his approval of the sale of St. Francis to Prime Healthcare “protect(s) access to care for the Los Angeles communities served” by St. Francis.

“The COVID-19 public health crisis has brought home the importance of having access to lifesaving hospital care nearby in our communities,” he said. “St. Francis Medical Center is not just an asset, it is an indispensable neighbor, it is the workers who serve the patients, and the doctors who save lives. We conditionally approve this sale to keep it that way.”

Prime Healthcare has built a reputation for saving financially distressed hospitals across the U.S., touting improved clinical quality. Healthgrades said Prime had hospitals named among the nation’s 100 best 53 times, and has been the recipient of several Patient Safety Excellence Awards.

The Attorney General’s office conducted an exhaustive review of the transaction for the past several months and carefully considered public input on the proposed transaction. The Attorney General’s approval includes conditions for the sale which Prime is currently reviewing. Pending a final ruling by the Bankruptcy Court, the transaction is expected to be completed this summer.

THE LARGER TREND

In early April, the U.S. Bankruptcy Court approved the Asset Purchase Agreement for the sale of St. Francis Medical Center to Prime. Under the agreement, Prime will acquire St. Francis for a net consideration of over $350 million, including a $200 million base cash price and $60 million for accounts receivable. In addition, Prime has committed to invest $47 million in capital improvements and extend offers of employment to nearly all staff.

The court also recently granted Verity’s request to reject the existing collective bargaining agreements with two unions that represent associates at St. Francis Medical Center, SEIU and UNAC. The court noted that Prime Healthcare was the only party to submit a qualifying bid for St. Francis and that without rejecting the existing CBAs, “St. Francis would not continue to operate as a going concern, and all of the UNAC (and SEIU) represented employees would lose their jobs.”

The court also noted that Prime and Verity had made multiple efforts to negotiate in good faith with the unions, and the parties devoted “hundreds of hours to negotiations,” but ultimately were unable to agree on new CBAs. Further, the court determined that one of the reasons for the hospital’s bankruptcy was the “legacy cost structure imposed by the existing CBAs.”

It then staid that the proposals were rejected “without good cause” by the unions. Prime said it negotiated in good faith and proposed increasingly generous offers to UNAC and SEIU with wages far above its existing agreements at its Los Angeles-area hospitals. Prime’s latest offer to SEIU maintained existing wages for roughly 90% of SEIU members, and increased wages for some of them. Prime said these wages would be substantially higher than those recently voted by SEIU members at three of Prime’s Los Angeles hospitals.

ON THE RECORD

“Receiving conditional approval is an important step in ensuring Prime is able to preserve the St. Francis mission for the benefit of associates, members of the medical staff and most importantly the patients and Southeast Los Angeles community that has relied on St. Francis for 75 years,” said Rich Adcock, CEO of Verity Health.

“We are honored to be selected to continue the St. Francis legacy and are working to review the conditions and finalize the sale as quickly as possible,” said Dr. Sunny Bhatia, CEO, Region I and chief medical officer of Prime Healthcare. “St. Francis’ mission is especially critical during this pandemic and we honor the service of all caregivers. Prime has already started investments at St. Francis that will enhance patient care as we commit to continue every service line, community benefit program, charity care and expand new services to the community.”

 

 

 

Coronavirus’s painful side effect is deep budget cuts for state and local government services

Posted on by • Posted in 2020 Election Issues, Budget, Capital Budget, Capital Expenditure, Coronavirus, Coronavirus Side Effects, Employee Benefits, Employee Furlough, Employee Hazard Pay, Employee Layoffs, Employee Pay Cuts, Financial Pressure, Financial Viability, Financially Distressed, Governance, Government, Health Policy, Health System, Hospital, Hospital Industry, Job, Job Loss, Job Market, Job Search, Job Security, Labor Spend Management, Operating Expenses, Operating Revenue, Public Health, Public Safety, Recession • Leave a comment

https://theconversation.com/coronaviruss-painful-side-effect-is-deep-budget-cuts-for-state-and-local-government-services-141105

Coronavirus's painful side effect is deep budget cuts for state ...

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.

Cutting jobs

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.

Suspending road, bridges, building and water system projects

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.

Cities and towns hit

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.

Fewer workers, less money

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.

 

 

 

Hospital margins could sink to a negative 7% this year: 5 things to know

Posted on by • Posted in Bankruptcy, Cash, Cash Reserves, Cash-Flow Improvements, Coronavirus, Credit, Credit Quality, Credit Ratings, Crisis, Crisis Management, Economic Stimulus, Financial Pressure, Financial Viability, Financially Distressed, Health Policy, Health System, Hospital, Hospital Industry, Net Income, Nonoperating Income, Operating Expenses, Operating Income, Operating Margin, Operating Performance, Operating Revenue, Pandemic, Personal Protective Equipment (PPE), Supply Chain, The CARES Act • Leave a comment

https://www.beckershospitalreview.com/finance/hospital-margins-could-sink-to-a-negative-7-this-year-5-things-to-know.html?utm_medium=email

New Kaufman Hall Report: Hospital Finances Crashed in April ...

The COVID-19 pandemic has created financial challenges for hospitals and health systems, and, without additional federal aid, half of US hospitals could be operating in the red in the second half of this year, according to an analysis released by the American Hospital Association on July 21.

Five takeaways from the analysis: 

1. Before the COVID-19 pandemic, the median hospital margin was 3.5 percent. COVID-19 is expected to drive the median hospital margin from positive to negative. 

2. Without funding from the Coronavirus Aid, Relief and Economic Security Act, hospital margins would have been a negative 15 percent in the second quarter of 2020. Margins are still expected to drop to a negative 3 percent in the second quarter.

3. Without additional aid from the federal government, hospital margins could sink to a negative 7 percent in the second half of this year. 

4. In the second quarter of this year, nearly half of U.S. hospitals had negative margins. Those hospitals will remain with negative margins without further financial support.  

5. “Heading into the COVID-19 crisis, the financial health of many hospitals and health systems were challenged, with many operating in the red,” said hospital association President and CEO Rick Pollack in a news release. “As today’s analysis shows, this pandemic is the greatest financial threat in history for hospitals and health systems and is a serious obstacle to keeping the doors open for many.” 

The full report, prepared by Kaufman, Hall & Associates and released by the AHA, is available here. 

 

 

 

 

Fitch: Nonprofit hospital margins unlikely to recover until COVID-19 vaccine

Posted on by • Posted in Coronavirus, Credit Quality, Credit Ratings, Crisis, Crisis Management, Expectations, Financial Pressure, Financial Ratios, Financial Viability, Financially Distressed, Health System, Hospital, Hospital Industry, Key Performance Indicators, Market Outlook, Net Income, Operating Expenses, Operating Income, Operating Margin, Operating Performance, Operating Revenue, Pandemic, Vaccination, Vaccine • Leave a comment

https://www.beckershospitalreview.com/finance/fitch-nonprofit-hospital-margins-unlikely-to-recover-until-covid-19-vaccine.html?utm_medium=email

What Happens When A Nonprofit Hospital Goes 'For-Profit' : Shots ...

Median financial ratios for nonprofit hospitals and health systems improved before the COVID-19 pandemic, which will provide some financial cushion to withstand financial pressures, according to a report from Fitch Ratings. 

The medians for 2019, based on 2018 data, showed the nonprofit hospital and health system sector stabilized after a period of operational softness. The medians for 2020, based on 2019 audited data, are expected to show improvement in operating margins driven by higher revenues, cost reductions and increased cash flow, Fitch said.

“We expect the 2020 medians will represent peak performance levels until the sector is able to recover from the effects of the pandemic on operations,” Fitch said. 

The credit rating agency said the nonprofit healthcare sector is unlikely to stabilize until a COVID-19 vaccine is widely available.

“The sector has shown considerable resiliency over the years, weathering significant events such as the Great Recession and legislative changes to funding,” Fitch said. “However, the coronavirus presents entirely new and fundamental challenges for the sector in the short term in the form of volume and revenue disruption, and over the medium to longer term with expected deterioration of individual provider payor mixes and possible changes in the behavior of healthcare consumers.”

 

 

 

 

Nonprofit health systems — despite huge cash reserves — get billions in CARES funding

Posted on by • Posted in 2020 Election Issues, Cash, Cash Reserves, Coronavirus, Dept of Health and Human Services (HHS), Economic Crisis, Economic Stimulus, Financially Distressed, Health System, Hospital, Hospital Industry, Medicare Advance Payments, Net Income, Nonoperating Income, Operating Expenses, Operating Income, Operating Margin, Operating Performance, Operating Revenue, Oversight, The CARES Act, Uncertainty • Leave a comment

https://www.healthcaredive.com/news/nonprofit-health-systems-despite-huge-cash-reserves-get-billions-in-car/580078/

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Next Steps for Public Policy | Cato Institute

Healthcare Dive’s findings revive concerns that greater examination of hospital finances is needed before divvying up COVID-19 rescue funding allocated by Congress.
The nation’s largest nonprofit health systems, led by Kaiser Permanente, Ascension and Providence, have received more than $7.1 billion in bailout funds from the federal government so far, as the novel coronavirus forced them to all but shutter their most profitable business lines.

At the same time, some of these same behemoth systems sit on billions in cash, and even greater amounts when taking into account investments that can be liquidated over time. That raises questions about how much money these systems actually need from the federal government given they have hundreds of days worth of cash on hand. Indeed, some big systems, like Kaiser Permanente, are already returning some of the funds.

And it revives concerns that greater examination of hospital finances is needed before divvying up rescue packages.

Nonprofits with more cash and greater net income tend to have received less funding — but not always

This is the second story of a Healthcare Dive series examining the bailout funds health systems received amid the COVID-19 pandemic. In this report, we focus on the 20 largest nonprofits by revenue and the amount of Coronavirus Aid, Relief, and Economic Security (CARES) Act funding they have received compared to the amount of cash on hand and recent financial performance. Healthcare Dive used bond filings filed as of June 12 to compile the amount of CARES funding received by health systems. In some instances, we relied on data from Good Jobs First, which also tracks the money. In addition to bond filings, we relied on annual audited financial statements and analyst reports to compile financial performance and days cash on hand.

Cash reserves

The cash hospitals have on hand has become an important metric to watch over the past few months as many have seen reserves dwindle to pay everyday expenses as revenue has dried up. At the same time, hospital volumes have plunged due to the economy grinding to a halt.

“You can’t write a payroll check off of accounts receivables, you have to write it off your cash and cash equivalents.” Rick Gundling, senior vice president of healthcare financial practices for Healthcare Financial Management Association, told Healthcare Dive.

In the early days of the outbreak in the U.S., some hospital executives sounded the alarm over dire financial straits, particularly small, rural hospitals whose executives warned they were weeks away from not making payroll. These pleas helped push Congress to pass massive rescue packages, with providers earmarked for $175 billion thus far.

Nonprofit health systems tend to keep more cash on hand than publicly-traded hospital chains. That’s because investor-owned facilities can raise capital more quickly, mainly through the stock market, while nonprofits have to rely on the bond market and their own operations, Gundling said.

Another important avenue that can boost cash is investments. It’s common for large nonprofits to rake in more in net income than they do from their core operations of running hospitals and caring for patients, in large part due to their investments in the stock market.

For example, Chicago-based CommonSpirit posted an operating loss of $602 million during its fiscal year 2019 but net income far exceeded that, totaling $9 billion. It was buoyed by investments and its recent merger, bringing together Catholic Health Initiatives and Dignity Health, according to its audited financial statement for the year ended June 30, 2019.

Many nonprofit health systems rake in more in net income than they do from their core operations

Ascension, the second-largest nonprofit system, received about $492 million in CARES funding, according to Good Jobs First. Ascension reported having 231 days cash on hand. Its unrestricted cash and investments totaled a sum of $15.5 billion as of March 31.

Kaiser, the nation’s largest nonprofit system, has about 200 days of cash on hand as of its fiscal year end, Dec. 31, according to a recent report from Fitch Ratings.

Providence, the third-largest nonprofit and first U.S. health system to treat a COVID-19 patient, reported 182 days of cash on hand as of March 31, according to a May bond filing.

However, Cleveland Clinic has the most cash on hand when measured in days among the top 20 nonprofits.

Cleveland Clinic had 337 days of cash on hand at the end of March, according to an unaudited financial statement from May. That’s nearly an entire year’s worth of operating expenses. The system has received $199 million in CARES funding, according to that same filing.

Rochester, Minnesota-based Mayo Clinic had the second most days of cash on hand with 252. Mayo Clinic has received $220 million in grant money, according to a May financial filing.

“You would never see that much cash on an investor-owned hospital,” Gundling said. “Generally, they want to pour that cash back into the services,” he said.

NYC Health + Hospitals, also the nation’s largest municipal health system, had the fewest days of cash on hand and it received $745 million in CARES funding, the second-most compared to other systems.

How health systems’ funding and cash on hand compare

Samantha Liss (@samanthann) | Twitter

Risks of accepting bailout money

Sitting on a pile of money and accepting the bailout funds is already raising eyebrows.

“There is significant headline risk,” Michael Abrams, co-founder and partner at Numerof & Associates, told Healthcare Dive.

Worried about the optics, other institutions with considerable reserves or endowments have returned federal bailout funds, including Harvard University and major health insurers.

Providers are returning relief funds, too. Kaiser Permanente, the nation’s largest nonprofit by revenue, told the San Francisco Business Times it has returned more than $500 million in CARES funding. CEO Greg Adams the system “will do fine” despite the setback from the pandemic.

Mara McDermott, vice president of McDermott+Consulting, agrees there is a risk in accepting the grant money if systems possess such large reserves. Yet, she also cautioned that the healthcare ecosystem is so much more complicated.

“Regardless of the structure, it requires a deeper dive into need and that’s not what HHS did. They just wrote checks,” McDermott told Healthcare Dive.

Just because a parent company has a large cash reserve, it doesn’t mean that the money is readily available on a daily basis to a smaller practice it may own down the chain and one that hasn’t had any patients since March, she said.

“It’s easy to point the finger… but it’s much more complex than that,” she said.

The first tranche of money HHS sent to hospitals was based on Medicare fee-for-service business, and later on net patient service revenue. These formulas were criticized for putting some hospitals at an advantage compared to others, particularly those with larger shares of Medicaid patients. HHS has since released more targeted funding for providers in hot spots such as New York and plans to funnel funding to those serving a large share of Medicaid members in an attempt to address earlier concerns.

Still, without certainty of how long this public health crisis will last, no one knows how much cash on hand will ultimately be enough.

“A year’s cash on hand sounds like a lot of money but when you expend hundreds of millions of dollars a month, it won’t take you long to burn through that,” Scott Graham, CEO of Three Rivers Hospital, a 25-bed facility in rural Washington state, told Healthcare Dive.

Graham had feared in March that without quick intervention from the government, his hospital was near closure with just a few weeks cash on hand. The federal grant money has bought his hospital some time, about six months if volumes stay where they are, longer if they tick back up.

“I think what HHS did was right at the moment because we needed to ensure that the healthcare system survived this. It’s one thing for a small rural hospital to close, it’s another thing for the entire health system to collapse,” he said.

 

Primary care physicians could take $15 billion hit due to COVID-19 in 2020

Posted on by • Posted in 2020 Election Issues, Cash, Cash Reserves, Coronavirus, Crisis, Crisis Management, Economic Crisis, Economic Stimulus, Economy Reopening, Financial Viability, Financially Distressed, Physician, Physician Compensation, Physician Practice Management, Primary Care, Telemedicine • Leave a comment

https://www.healthcaredive.com/news/primary-care-physicians-could-take-15-billion-hit-due-to-covid-19-in-2020/580600/

Dive Brief:

  • The financial impact on primary care practices due to the COVID-19 pandemic has been profound and will likely continue in the months ahead, according to a new study published in Health Affairs.
  • Visits of all types to medical practices declined 58% in March and April compared to the baseline average, and in-person patient encounters declined by 69%, the study found. Although visits are expected to have rebounded by June, volumes are still below pre-COVID-19 levels.
  • The drop in fee-for-service revenue for the 2020 calendar year is nearly $68,000 per physician, contributing to an estimated revenue decline of 12.5%. That’s a steep enough loss to threaten the financial viability of many practices. Losses to primary care practices nationwide could top $15 billion over the year — a number that could grow if the federal government reverts increased telemedicine payment rates.

Dive Insight:

Medical practices across the United States have been hit hard by the COVID-19 outbreak.

The new study by researchers from Harvard Medical School and the American Board of Family Medicine attempts to put a price tag on that hit by running a microsimulation for projected 2020 revenues based on volume data for general practices, general internal medicine practices, general pediatric practices and family medicine practices.

As a result, they concluded that the average revenue loss per practice per physician will be $67,774, even taking into account revenue generated by telemedicine visits, which did not make up for the massive loss of patient volume during the spring.

That loss could be cut to as little as $28,265 per full-time physician if other staff is furloughed and salaries are cut to the 25th percentile of such cuts that took place during the peak of the stay-at-home orders.

Some practices are also projected to have steeper losses. Rural primary care practices are projected to lose $75,274 per physician. Other studies have suggested that pediatric practices have been hit harder than other primary care fields. Some organizations, such as the American Medical Group Association, say revenue won’t rebound fully even next year.

The study also conducted various alternate scenarios for the remainder of 2020, including a second wave of COVID-19 in the fall. The researchers estimated that would cut patient volumes by about half as much as what occurred during the spring. However, the financial hit would deepen even further, reaching $85,666 per physician.

Altogether, the study projects primary care practices will lose $15.1 billion in fee-for-service revenue this year, not even accounting for a second wave of the coronavirus. The study’s authors note that “this loss would balloon substantially if telemedicine payment rates revert back to pre-COVID-19 levels towards the end of the year.”

The study concluded that while primary care physicians as a whole have not been as hard hit as the hospital sector, the services they provide in managing chronic diseases such as diabetes and as the port of entry for many into the healthcare system makes them too valuable to suffer sustained levels of financial damage.

 

 

 

Quorum Health to emerge from bankruptcy next month

Posted on by • Posted in Bankruptcy, Chapter 11, Financially Distressed, For-Profit, Health System, Private Equity, Recapitalize, Reorganization, Restructure • Leave a comment

https://www.healthcaredive.com/news/quorum-bankruptcy-approval-emerging-in-july/580805/

Dive Brief:

  • For-profit hospital operator Quorum Health received approval of its plan to recapitalize the business Monday in U.S. Bankruptcy Court for the District of Delaware. Quorum expects to emerge from bankruptcy in early July, according to regulatory filings.
  • The system filed for Chapter 11 bankruptcy April 7 to address current liquidity needs while continuing to care for patients and keep its hospitals operating amid a pandemic, according to a statement. It entered into a restructuring agreement with a majority of its lenders and noteholders.
  • Quorum still needs the court to issue a final order, but said the reorganization will reduce its debt by about $500 million, as originally expected.

Dive Insight:

Tennessee-based Quorum Health, which operates 22 rural and mid-sized hospitals in 13 states, may have been more ill-positioned financially than other systems going into the pandemic.

The company went public in May 2016 with 38 hospitals — 14 of which have since shuttered. In 2017, private equity firm KKR took a 5.6% stake in the system for $11.3 million.

Beyond being Quorum’s largest debt-holder today, KKR also owns about 9% of its public shares. In December, the firm offered to buy Quorum out and take the hospital chain private at $1 a share.

But that didn’t pan out, and Quorum instead ended up filing for bankruptcy in April, soon after the COVID-19 pandemic hit. The restructuring agreement now “allows our company to begin a new chapter with the flexibility and resources to continue supporting our community hospitals as they serve on the frontlines of this pandemic and beyond,” Marty Smith, Quorum’s executive vice president and chief operating officer, said in a statement Monday.

“We are grateful for the confidence of our financial stakeholders and partners, as well as our dedicated employees and physicians, and look forward to building on the significant progress we have made in strengthening our operations in recent years,” he said.

 

 

 

 

Navigating a Post-Covid Path to the New Normal with Gist Healthcare CEO, Chas Roades

Posted on by • Posted in Affordability, Board, Board Assessment, Board Competency, Board Engagement, Brand Loyalty, Branding, Business to Consumer Model, Capitation, Cash, Cash Reserves, Competition, Consumer Loyalty, Consumer Trust, Consumerism, Coronavirus, Corporate Overhead, Corporate Strategy, Cost Management, Cost Reduction, Crisis, Crisis Management, Cross Subsidy Model, Debt Service, Decision Making, Demographics, Disruption, Disruptive Technology, Economic Crisis, Economic Stimulus, Efficiency, Elective Procedures, Elective Surgery, Fee for Service Reimbursement, Financial Incentives, Financial Viability, Financially Distressed, Focus, Governance, Health Insurance Coverage Adequacy, Health Insurance Industry, Health Policy, Health System, High Deductible Health Plans, High Drug Prices, High Prices, Hospital, Hospital Industry, Job, Job Market, Job Search, Job Security, KPI Dashboards, Labor Spend Management, Leadership, Leadership Alignment, Leadership Trust, Market Consolidation, Market Power, Market Share, Market Trends, Market Uncertainty, Medical Group, Member Health, Mergers & Acquisitions, Net Income, Nonoperating Income, Objectivity, Operating Expense Reduction, Operating Expenses, Operating Income, Operating Margin, Operating Performance, Operating Revenue, Out of Pocket Expenses, Pandemic, Physician, Physician Employment, Physician Independent Network (IPA), Physician Multispecialty Network, Physician Practice Management, Price Transparency, Pricing, Primary Care Delivery Model, Primary Care Loyalty, Private Equity, Profit Model, Quality, Quality of Care, Safety, Strategic Alignment, Strategic Leadership, Strategy, Streamlining Operations, Supply Chain, Surprise Bills, Telemedicine, Trust, Trusted Brand, Truth, Value, Value Creation, Value Proposition, Value-Based Healthcare, Virtual Healthcare, Virtual Reality, Virtual Visit, Workplace Safety • Leave a comment

https://www.lrvhealth.com/podcast/?single_podcast=2203

Covid-19, Regulatory Changes and Election Implications: An Inside ...Chas Roades (@ChasRoades) | Twitter

Healthcare is Hard: A Podcast for Insiders; June 11, 2020

Over the course of nearly 20 years as Chief Research Officer at The Advisory Board Company, Chas Roades became a trusted advisor for CEOs, leadership teams and boards of directors at health systems across the country. When The Advisory Board was acquired by Optum in 2017, Chas left the company with Chief Medical Officer, Lisa Bielamowicz. Together they founded Gist Healthcare, where they play a similar role, but take an even deeper and more focused look at the issues health systems are facing.

As Chas explains, Gist Healthcare has members from Allentown, Pennsylvania to Beverly Hills, California and everywhere in between. Most of the organizations Gist works with are regional health systems in the $2 to $5 billion range, where Chas and his colleagues become adjunct members of the executive team and board. In this role, Chas is typically hopscotching the country for in-person meetings and strategy sessions, but Covid-19 has brought many changes.

“Almost overnight, Chas went from in-depth sessions about long-term five-year strategy, to discussions about how health systems will make it through the next six weeks and after that, adapt to the new normal. He spoke to Keith Figlioli about many of the issues impacting these discussions including:

  • Corporate Governance. The decisions health systems will be forced to make over the next two to five years are staggeringly big, according to Chas. As a result, Gist is spending a lot of time thinking about governance right now and how to help health systems supercharge governance processes to lay a foundation for the making these difficult choices.
  • Health Systems Acting Like Systems. As health systems struggle to maintain revenue and margins, they’ll be forced to streamline operations in a way that finally takes advantage of system value. As providers consolidated in recent years, they successfully met the goal of gaining size and negotiating leverage, but paid much less attention to the harder part – controlling cost and creating value. That’s about to change. It will be a lasting impact of Covid-19, and an opportunity for innovators.
  • The Telehealth Land Grab. Providers have quickly ramped-up telehealth services as a necessity to survive during lockdowns. But as telehealth plays a larger role in the new standard of care, payers will not sit idly by and are preparing to double-down on their own virtual care capabilities. They’re looking to take over the virtual space and own the digital front door in an effort to gain coveted customer loyalty. Chas talks about how it would be foolish for providers to expect that payers will continue reimburse at high rates or at parity for physical visits.
  • The Battleground Over Physicians. This is the other area to watch as payers and providers clash over the hearts and minds of consumers. The years-long trend of physician practices being acquired and rolled-up into larger organizations will significantly accelerate due to Covid-19. The financial pain the pandemic has caused will force some practices out of business and many others looking for an exit. And as health systems deal with their own financial hardships, payers with deep pockets are the more likely suitor.”