Cartoon – Business Failure
Category Archives: Financially Distressed
7 health systems report $1B+ losses in Q1
Health systems across the U.S. saw revenue decline, expenses rise and investment gains dwindle in the first quarter of this year due to the COVID-19 pandemic.
For the three months ended March 31, some of the biggest nonprofit health systems in the U.S. reported losses. Below are seven health systems that reported net losses of $1 billion or more.
Ascension (St. Louis)
Revenue: $6.1 billion
Operating loss: $429.4 million
Net loss: $2.7 billion
CommonSpirit Health (Chicago)
Revenue: $7.8 billion
Operating loss: $145 million
Net loss: $1.4 billion
Kaiser Permanente (Oakland, Calif.)
Revenue: $22.6 billion
Operating income: $1.3 billion
Net loss: $1.1 billion
Providence (Renton, Wash.)
Revenue: $6.3 billion
Operating loss: $276 million
Net loss: $1.1 billion
Sutter Health (Sacramento, Calif.)
Revenue: $3.2 billion
Operating loss: $236 million
Net loss: $1.1 billion
Advocate Aurora Health (Downers Grove, Ill., and Milwaukee)
Revenue: $3.1 billion
Operating loss: $85.6 million
Net loss: $1.3 billion
Intermountain Healthcare (Salt Lake City)
Revenue: $2.3 billion
Operating income: $115 million
Net loss: $1 billion
Tower Health cutting 1,000 jobs as COVID-19 losses mount
https://www.inquirer.com/business/health/tower-health-hospital-layoffs-covid-19-20200616.html
Tower Health on Tuesday announced that it is cutting 1,000 jobs, or about 8 percent of its workforce, citing the loss of $212 million in revenue through May because of the coronavirus restrictions on nonurgent care.
Fast-growing Tower had already furloughed at least 1,000 employees in April. It’s not clear how much overlap there is between the furloughed employees, some of whom have returned to work, and the people who are now losing their jobs permanently. Tower employs 12,355, including part-timers.
“The government-mandated closure of many outpatient facilities and the suspension of elective procedures caused a 40 percent drop in system revenue,” Tower’s president and chief executive, Clint Matthews, wrote in an email to staff. “At the same time, our spending increased for personal protective equipment, staff support, and COVID-related equipment needs.”
Despite the receipt of $66 million in grants through the federal CARES Act, Tower reported an operating loss of $91.6 million in the three months ended March 31, according to its disclosure to bondholders.
Tower, which is anchored by Reading Hospital in Berks County, expanded most recently with the December acquisition of St. Christopher’s Hospital for Children in a partnership with Drexel University. Tower paid $50 million for the hospital’s business, but also signed a long-term lease with a company that paid another $65 million for the real estate.
In 2017, Tower paid $418 million for five community hospitals in Southeastern Pennsylvania — Brandywine in Coatesville, Chestnut Hill in Philadelphia, Jennersville Regional in West Grove, Phoenixville in Phoenixville, and Pottstown Memorial Medical Center, now called Pottstown Hospital, in Pottstown.
Tower’s goal was to remain competitive as bigger systems — the University of Pennsylvania Health System and Jefferson Health from the Southeast, Lehigh Valley Health Network and St. Luke’s University Health Network from the east and northeast, and University of Pittsburgh Medical Center from the west — encroached on its Berk’s county base.
Tower had set itself a difficult task in the best of times, but COVID-19 has made it significantly harder for the nonprofit, which had an operating loss of $175 million on revenue of $1.75 billion in the year ended June 30, 2019.
Because health systems have high fixed costs for buildings and equipment needed no matter how many patients are coming through the door, it’s hard for them to limit the impact of the 30% to 50% collapse in demand caused by the coronavirus pandemic.
“Hospitals and all other health service providers were hit with this disruption with lightning speed, forcing the industry to learn in real time how to handle a situation for which there was no playbook,” Standard & Poor’s analysts David P. Peknay and Suzie R. Desai said in a research report last month.
Tower’s said positions will be eliminated in executive, management, clinical, and support areas.
The cuts include consolidations of clinical operations. Tower plans to close Pottstown Hospital’s maternity unit, which employs 32 nurses and where 359 babies were born in 2018, according to the most recent state data. Tower also has maternity units at Reading Hospital in West Reading and at Phoenixville Hospital.
Tower is aiming to trim expenses by $230 million over the next two years, Matthews told staff.
Like many other health systems, Tower has taken advantage of federal programs to ensure that it has ample cash in the bank to run its businesses. Tower has deferred payroll taxes, temporarily sparing $25 million. It received $166 million in advanced Medicare payments in April.
In the private sphere, Tower obtained a $40 million line of credit in April for St. Chris, which has lost $23.6 million on operations since Tower and Drexel bought it in December. Last month, Tower said it was in the final stages of negotiating a deal to sell and then lease back 24 medical office buildings. That was expected to generate $200 million in cash for Tower.
Predicting COVID-19’s Long-Term Impact on the Home Health Care Market
Predicting COVID-19’s Long-Term Impact on the Home Health Care Market
The Patient-Driven Groupings Model (PDGM) and its unintended ripple effects were supposed to be the dominant story this year for the nation’s 12,000 or so Medicare-certified home health care providers. But the coronavirus has rewritten the script for 2020, throwing most of the industry’s previous projections out the window.
While PDGM — implemented on Jan. 1 — will still shape home health care’s immediate future, several other long-term trends have emerged as a result of the coronavirus and its impact on the U.S. health care system.
These trends include unexpected consolidation drivers and the sudden embrace of telehealth technology, the latter of which is a development that will affect home health providers in ways both profoundly positive and negative. Unforeseen, long-term trends will also likely include drastic overhauls to the Medicare Home Health Benefit, a revival of SNF-to-home diversion and more.
Now that providers have had roughly three full months to adapt to the coronavirus and transition out of crisis mode, Home Health Care News is looking ahead to what the industry can expect for the rest of 2020 and beyond.
‘Historic’ consolidation will still happen, with some unexpected drivers
Although the precise extent was often up for debate, most industry insiders predicted some level of consolidation in 2020, driven by PDGM, the phasing out of Requests for Anticipated Payment (RAPs) and other factors.
That certainly appeared to be true early on in the year, with Amedisys Inc. (Nasdaq: AMED), LHC Group Inc. (Nasdaq: LHCG) and other home health giants reporting more inbound calls related to acquisition opportunities or takeovers of financially distressed agencies.
In fact, during a fourth-quarter earnings call, LHC Group CEO and Chairman Keith Myers suggested that 2020 would kick off a “historic” consolidation wave that would last several years.
“As a result of this transition in Q4 and the first few months of 2020, we have seen an increase in the number of inbound calls from smaller agencies looking to exit the business,” Myers said on the call. “Some of these opportunities could be good acquisition candidates, and others we can naturally roll into our organic growth through market-share gains.”
Most of those calls stopped with the coronavirus, however.
Although the vast majority of home health agencies have experienced a decline in overall revenues during the current public health emergency, many have been able to compensate for losses thanks to the federal government’s multi-faceted response.
For some, that has meant taking advantage of the approximately $1.7 billion the U.S. Centers for Medicare & Medicaid Services (CMS) has distributed through its advanced and accelerated payment programs. For others, it has meant accepting the somewhat murky financial relief sent their way under the Provider Relief Fund.
In addition to those two possible sources of financial assistance, all Medicare-certified home health agencies have benefitted from Congress’s move to suspend the 2% Medicare sequestration until Dec. 31.
Eventually, those coronavirus lifelines and others will be pulled back, kickstarting M&A activity once again.
“We believe that a lot of the support has stopped or postponed the shakeout that’s occurring in home health — or that we anticipated would be occurring around this time,” Amedisys CEO and President Paul Kusserow said in March. “We don’t believe it’s over, though.”
Not only will consolidation happen, but some of it will be fueled by unexpected players.
With the suspension of elective surgeries and procedures, hospitals and health systems have lost billions of dollars. Rick Pollack, president and CEO of the American Hospital Association (AHA), estimated that hospitals are losing as much as $50 billion a month during the coronavirus.
“I think it’s fair to say that hospitals are facing perhaps the greatest challenge that they have ever faced in their history,” Pollack, whose organization represents the interests of nearly 5,000 hospitals, told NPR.
To cut costs, some hospitals may look to get rid of their in-house home health divisions. It’s a trend that may already be happening, too.
The Home Health Benefit will look drastically different
With a mix of temporary and permanent regulatory changes, including a redefinition of the term “homebound,” the Medicare Home Health Benefit already looks very different now than it did three months ago. But the benefit will likely go through further retooling in the not-too-distant future.
Broadly, the Medicare Part A Trust Fund finances key services for beneficiaries.
While vital to the national health care infrastructure, the fund is going broke — and fast. In the most recent CMS Office of the Actuary report released in April, the Trust Fund was projected to be entirely depleted by 2026.
The COVID-19 virus has only accelerated the drain on the fund, with some predicting it to run out of money two years earlier than anticipated. A group of health care economics experts from Harvard and MIT wrote about the very topic on a joint Health Affairs op-ed published Wednesday.
“COVID-19 is causing the Medicare Part A program and the Hospital Insurance (HI) Trust Fund to contend with large reductions in revenues due to increased unemployment, reductions in salaries, shifts to part-time employment from full time and a reduction in labor force participation,” the group wrote. “In addition to revenue declines, there was a 20% increase in payments to hospitals for COVID-related care and elimination of cost sharing associated with treatment of COVID.”
Besides those and other cost pressures, Medicare is simultaneously expanding by about 10,000 new people every day. The worst-case scenario: the Medicare Part A Trust Fund goes broke closer to 2024.
There are numerous policy actions that can be taken to reduce the financial strain on the trust fund. In their op-ed, for example, the team of Harvard and MIT researchers suggested shifting all of home health care under Part B.
In 2018, Medicare spent about $17.9 billion on home health benefits, with roughly 66% of that falling under Part B, which typically includes community-based care that isn’t linked to hospital or nursing home discharge. Consolidating all of home health care into Part B would move billions of dollars away from Part A, in turn expanding the Trust Fund’s lifecycle.
“Such a policy change would move nearly $6 billion in spending away from the Part A HI Trust Fund but would put upward pressure on the Part B premium,” the researchers noted.
Of course, all post-acute care services may still undergo a transformation into a unified payment model one day. However, the coronavirus has devastated skilled nursing facility (SNF) operators, who were already dealing with the Patient-Driven Payment Model (PDPM), a payment overhaul of their own.
Regulators may shy away from introducing further disruption until SNFs have a chance to recover, a process likely to take years — if not decades.
Previously, the Trump administration had estimated that a unified payment system based on patients’ clinical needs rather than site of care would save a projected $101.5 billion from 2021 to 2030.
Telehealth will be a double-edged sword
The move toward telehealth was a long-term trend that home health providers were cognizant of before COVID-19, even if some clinicians were personally skeptical of virtual visits. But because the virus has demanded social distancing, telehealth has forced its way into health care in a manner that would have been almost unimaginable in 2019.
In late April, during a White House Coronavirus Task Force briefing, President Donald Trump indicated that the number of patients using telehealth had increased from about 11,000 per week to more than 650,000 people per week.
Meanwhile, MedStar Health went from delivering just 10 telehealth visits per week to nearly 4,000 per day.
Backed by policymakers, technology companies and consumers, telehealth is likely here to stay.
“I think the genie’s out of the bottle on this one,” CMS Administrator Seema Verma said in April. “I think it’s fair to say that the advent of telehealth has been just completely accelerated, that it’s taken this crisis to push us to a new frontier, but there’s absolutely no going back.”
The telehealth boom could mean improved patient outcomes and new lines of business for home health providers. But it could also mean more competition moving forward.
For telehealth to be a true game-changer for home health providers, Congress and CMS would need to pave the way for direct reimbursement. Currently, a home health provider cannot get paid for delivering virtual visits in fee-for-service (FFS) Medicare.
Sen. Susan Collins (R-Maine) has floated the idea of introducing legislation that would allow for direct telehealth reimbursement in the home health space, but, so far, no concrete steps have been taken — at least in public. With a hyper-polarized Congress and a long list of other national priorities taking up the spotlight, it’s impossible to guess whether home health telehealth reimbursement will actually happen.
While home health providers can’t directly bill for in-home telehealth visits, hospitals and certain health care practitioners can. That regulatory imbalance could lead to providers being used less frequently as “the eyes and ears in the home,” some believe.
A new SNF-to-home diversion wave will emerge
Over the past two decades, many home health providers have been able to expand their patient census by poaching patients from SNFs. Often referred to as SNF-to-home diversion, the approach didn’t just benefit home health providers, though. It helped cut national health care spending by shifting care into lower-cost settings.
At first, the stream of SNF residents being shifted into home health care was like water being shot from a firehose: In 2009, there were 1,808 SNF days per 1,000 FFS Medicare beneficiaries, a March 2018 analysis from consulting firm Avalere Health found. By 2016, that number plummeted to 1,539 days per 1,000 beneficiaries — a 15% drop.
In recent years, that steady stream has turned into a slow trickle, with more patients being sent to home health care right off the bat. In the first quarter of 2019, 23.3% of in-patient hospital discharges were coded for home health care, while 21.1% were coded for SNFs, according to data from analytics and metrics firm Trella Health.
Genesis HealthCare (NYSE: KEN) CEO George Hager suggested the initial SNF-to-home diversion wave was over in March 2019. Kennett Square, Pennsylvania-based Genesis is a holding company with subsidiaries that operate hundreds of skilled nursing centers across the country.
“To anyone [who] would want [to] or has toured a skilled nursing asset, I would challenge you to look at the patients in our building and find patients that could be cared for in a home-based or community-based setting,” Hager said during a presentation at the Barclays Global Healthcare Conference. “The acuity levels of an average patient in a skilled nursing center have increased dramatically.”
Yet that was all before the coronavirus.
Over the last three months, more than 40,600 long-term care residents and workers have died as a result of COVID-19, according to an analysis of state data gathered by USA Today. That’s about 40% of the U.S.’s overall death toll.
CMS statistics place that number closer to 26,000.
In light of those figures and infection-control issues in congregate settings, home health providers will see a new wave of SNF-to-home diversion as robust as the first. As the new diversion wave happens, providers will need to be prepared to care for patients with higher acuity levels and more co-morbidities.
“[That’s going to change] the psyche of the way people are going to view SNFs and long-term care facilities for the rest of our generation,” Bruce Greenstein, LHC Group’s chief strategy and innovation officer, said during a June presentation at the Jefferies Virtual Healthcare Conference. “You would never want to put your parent in a facility if you don’t have to. You want options now.”
One stat to back up this idea: Over 50% of family members are now more likely to choose in-home care for their loved ones than they were prior to the coronavirus, according to a survey from health care research and consulting firm Transcend Strategy Group.
Separate from SNF-to-home diversion, hospital-to-home models will also likely continue to gain momentum after the coronavirus.
There will be a land grab for palliative care
Over the past two years, home health providers have aggressively looked to expand into hospice care, partly due to the space’s relatively stable reimbursement landscape. Amedisys — now one of the largest hospice providers in the U.S. — is the prime example of that.
During the COVID-19 crisis, palliative care has gained greater awareness. Generally, palliative care is specialized care for people living with advanced, serious illnesses.
“Right now, we are seeing from our hospital partners and our community colleagues the importance of palliative care, including advanced care as well as appropriate pain and symptom management,” Capital Caring Chief Medical Officer Dr. Matthew Kestenbaum previously told HHCN. “The number of palliative care consults we’re being asked to perform in the hospitals and in the community has actually increased. The importance of palliative care is absolutely being shown during this pandemic.”
As community-based palliative care programs continue to prove their mettle amid the coronavirus, home health providers will increasingly consider expanding into the market to further diversify their services.
Currently, just 10% of community-based palliative care programs are operated by home health agencies.
Demand will reach an all-time high
The home health industry may ultimately shrink in terms of raw number of agencies, but the overall size of the market is very likely to expand at a faster-than-anticipated pace.
In years to come, home health providers will still ride the macro-level tailwinds of an aging U.S. population with a proven preference to age in place — that hasn’t changed. But because of SNF-to-home diversion and calls to decentralize the health care system with home- and community-based care, providers will see an increase in referrals from a variety of sources.
In turn, home health agencies will need to ramp up their recruitment and retention strategies.
There’s already early evidence of this happening.
Last week, in St. Louis, Missouri, four home-based care agencies announced that they were hiring a combined 1,000 new employees to meet the surge in demand, according to the St. Louis Dispatch.
Meanwhile, Brookdale Senior Living Inc. (NYSE: BKD) similarly announced plans to hire 4,500 health care workers, with 10% of those hires coming from the senior living operator’s health care services segment.
Bayada Home Health Care likewise announced plans to ramp up hiring.
“We are absolutely hiring more people now than ever,” Bayada CEO David Baiada previously told HHCN. “The need for services — both because of societal and demographic evolution, but also because of what we anticipate as a rebound and an increase in the demand for home- and community-based care delivery as a result of the pandemic — is requiring us to continue to accelerate our recruitment efforts.”
The bottom line: The coronavirus may have presented immediate obstacles for home health providers, but the long-term outlook is brighter than ever.
INSIGHT: Health-Care M&A Post-Pandemic—Opportunities, Not Opportunism
The Covid-19 pandemic has devastated the health-care industry. In addition to the tragedies that the pandemic has brought, health systems have universally experienced severe and rapid deterioration of their bottom lines due to plummeting patient volumes, pausing of high margin elective surgical procedures, and increased expenses.
By some estimates, health system losses will be around $200 billion by the end of June and revenues have dropped by around 50 percent. As a result of the financial uncertainty caused by the pandemic, many hospital and health systems terminated or delayed potential transactions as they focused on managing the crisis and protecting their workforces and communities.
But this may just be the calm before a big M&A storm.
Rise in M&A Activity
Through our work as legal and communications counselors, we have seen preliminary M&A activity rise in recent weeks, with providers exploring and negotiating transactions, including several that have not yet been publicly announced.
Some systems are looking to capitalize on the time between the end of the first wave of Covid-19 and a potential resurgence in the fall to get letters of intent finalized and announced. This coming M&A activity presents legal and communications challenges when the national spotlight is firmly on health systems.
Providers are starting to resurrect deals that were paused during the initial period of the Covid-19 crisis, including Community Health System’s sale of Abilene Regional Medical Center and Brownwood Regional Medical Center to Hendrick Health System.
Some systems are seeking new strategic partners, such as Lake Health in Ohio, and New Hanover Regional Medical Center in North Carolina, which resumed its recent RFP response process after a pause.
Still others are looking for new opportunities consistent with pre-Covid growth strategies, as adjusted for pandemic-related developments and challenges.
More Consolidation
Larger and more financially robust health systems are expected to weather the crisis, whereas smaller systems and hospitals with less cash and tighter operating margins, including rural and critical access hospitals, may be facing insolvency, closure, and bankruptcy. This creates a scenario where one party is financially distressed as a result of the pandemic and needs to partner with or join another system to survive. These circumstances will likely fuel increased consolidation in the health-care industry.
For a struggling provider, joining a larger system can offer much-needed financial commitments, access to capital, disciplined management structure, economies of scale for purchasing and improved IT infrastructure, among many other strategic benefits. A well-positioned system, even if financially weakened due to pandemic challenges, will be able to negotiate favorable deal terms if it has significant strategic value to its prospective partner.
Communications Strategy is Important
As providers explore and execute partnerships, they must implement a stakeholder and communications strategy that focuses on benefits for each side given the new financial reality. Doing so will minimize criticism of opportunism by the acquiring system—and best position a definitive agreement and successful deal.
An effective communications strategy will emphasize how the proposed transaction will maintain or improve quality or affordability, ensure access to care for communities and address financial challenges faced by health systems as a result of the pandemic.
Health systems should articulate how their M&A activity will stabilize affected health systems, allow them to manage the Covid-19 crisis and future pandemics, and continue to meet the overall care needs of the community. It can also highlight how these partnerships will facilitate continued care in a market, which otherwise might lose a valuable health-care resource, as well as the positive economic benefits the transaction will bring for local communities.
Communications that support the vision, rationale and benefits of a deal will also need to be relevant to the regulatory bodies whose approval may be required.
Public perception and support of health-care providers have been extremely positive during the pandemic to date, as evidenced by homemade banners, balcony tributes, and praise on social media. Health systems and their staffs have borne personal risk and financial pain by focusing on patients and public health at the expense of all else. This goodwill can be valuable as health systems seek stakeholder and community support for their transactions.
That goodwill can also quickly be forgotten.
As health systems race to the altar to beat out competitors for M&A targets and other strategic relationships, it is critical that they are thoughtful in structuring their deals and justifying the activity.
For example, acquisitions and partnerships involving substantial outlays of capital and lucrative executive compensation or severance packages will be viewed negatively if undertaken by a system that instituted large compensation reductions across the system or even furloughed or laid off employees during the pandemic.
As the dust begins to settle from the first wave of Covid-19, it is clear that there will be drastic changes to how health systems do business. The pandemic will also create financial winners and losers. Hospitals and health systems must think proactively about a strategy for growth as opportunities with willing transaction partners arise.
But being proactive must be balanced against appearing to be opportunistic or taking advantage of the worst health crisis in our lifetimes. To maintain their goodwill and reputations, health systems should continue to do deals for the right reasons and for the benefit of their communities.
State-by-state breakdown of 130 rural hospital closures
Nearly one in five Americans live in rural areas and depend on their local hospital for care. Over the past 10 years, 130 of those hospitals have closed.
Thirty-three states have seen at least one rural hospital shut down since 2010, and the closures are heavily clustered in states that have not expanded Medicaid under the ACA, according to the Cecil G. Sheps Center for Health Services Research.
Twenty-one rural hospitals in Texas have closed since 2010, the most of any state. Tennessee has the second-most closures, with 13 rural hospitals shutting down in the past decade. In third place is Oklahoma with eight closures.
Listed below are the 130 rural hospitals that have closed since Jan. 1, 2010, as tracked by the Sheps Center. For the purposes of its analysis, the Sheps Center defined a hospital closure as the cessation in the provision of inpatient services.
“We follow the convention of the Office of Inspector General that a closed hospital is ‘a facility that stopped providing general, short-term, acute inpatient care,'” reads a statement on the Sheps Center’s website. “We did not consider a hospital closed if it: merged with, or was sold to, another hospital but the physical plant continued to provide inpatient acute care, converted to critical access status, or both closed and reopened during the same calendar year and at the same physical location.”
As of June 8, all the facilities listed below had stopped providing inpatient care. However, some of them still offered other services, including outpatient care, emergency care, urgent care or primary care.
Alabama
SouthWest Alabama Medical Center (Thomasville)
Randolph Medical Center (Roanoke)
Chilton Medical Center (Clanton)
Florence Memorial Hospital
Elba General Hospital
Georgiana Medical Center
Alaska
Sitka Community Hospital
Arizona
Cochise Regional Hospital (Douglas)
Hualapai Mountain Medical Center (Kingman)
Florence Community Healthcare
Arkansas
De Queen Medical Center
California
Kingsburg Medical Center
Corcoran District Hospital
Adventist Health Feather River (Paradise)
Coalinga Regional Medical Center
Florida
Campbellton-Graceville Hospital
Regional General Hospital (Williston)
Shands Live Oak Regional Medical Center
Shands Starke Regional Medical Center
Georgia
Hart County Hospital (Harwell)
Charlton Memorial Hospital (Folkston)
Calhoun Memorial Hospital (Arlington)
Stewart-Webster Hospital (Richland)
Lower Oconee Community Hospital (Glenwood)
North Georgia Medical Center (Ellijay)
Illinois
St. Mary’s Hospital (Streator)
Indiana
Fayette Regional Health System
Kansas
Central Kansas Medical Center (Great Bend)
Mercy Hospital Independence
Mercy Hospital Fort Scott
Horton Community Hospital
Oswego Community Hospital
Sumner Community Hospital (Wellington)
Kentucky
Nicholas County Hospital (Carlisle)
Parkway Regional Hospital (Fulton)
New Horizons Medical Center (Owenton)
Westlake Regional Hospital (Columbia)
Louisiana
Doctor’s Hospital at Deer Creek (Leesville)
Maine
St. Andrews Hospital (Boothbay Harbor)
Southern Maine Health Care-Sanford Medical Center
Parkview Adventist Medical Center (Brunswick)
Maryland
Edward W. McCready Memorial Hospital (Crisfield)
Massachusetts
North Adams Regional Hospital
Michigan
Cheboygan Memorial Hospital
Minnesota
Lakeside Medical Center
Albany Area Hospital
Albert Lea-Mayo Clinic Health System
Mayo Clinic Health System-Springfield
Mississippi
Patient’s Choice Medical of Humphreys County (Belzoni)
Pioneer Community Hospital of Newton
Merit Health Natchez-Community Campus
Kilmichael Hospital
Quitman County Hospital (Marks)
Missouri
Sac-Osage Hospital (Osceola)
Parkland Health Center-Weber Road (Farmington)
Southeast Health Center of Reynolds County (Ellington)
Southeast Health Center of Ripley County (Doniphan)
Twin Rivers Regional Medical Center (Kennett)
I-70 Community Hospital (Sweet Springs)
Pinnacle Regional Hospital (Boonville)
Nebraska
Tilden Community Hospital
Nevada
Nye Regional Medical Center (Tonopah)
New York
Lake Shore Health Care Center
Moses-Ludington Hospital (Ticonderoga)
North Carolina
Blowing Rock Hospital
Vidant Pungo Hospital (Belhaven)
Novant Health Franklin Medical Center (Louisburg)
Yadkin Valley Community Hospital (Yadkinville)
Our Community Hospital (Scotland Neck)
Sandhills Regional Medical Center (Hamlet)
Davie Medical Center-Mocksville
Ohio
Physicians Choice Hospital-Fremont
Doctors Hospital of Nelsonville
Oklahoma
Muskogee Community Hospital
Epic Medical Center (Eufaula)
Memorial Hospital & Physician Group (Frederick)
Latimer County General Hospital (Wilburton)
Pauls Valley General Hospital
Sayre Community Hospital
Haskell County Community Hospital (Stigler)
Mercy Hospital El Reno
Pennsylvania
Saint Catherine Medical Center Fountain Springs (Ashland)
Mid-Valley Hospital (Peckville)
Ellwood City Medical Center
UPMC Susquehanna Sunbury
South Carolina
Bamberg County Memorial Hospital
Marlboro Park Hospital (Bennettsville)
Southern Palmetto Hospital (Barnwell)
Fairfield Memorial Hospital (Winnsboro)
South Dakota
Holy Infant Hospital (Hoven)
Tennessee
Riverview Regional Medical Center South (Carthage)
Starr Regional Medical Center-Etowah
Haywood Park Community Hospital (Brownsville)
Gibson General Hospital (Trenton)
Humboldt General Hospital
United Regional Medical Center (Manchester)
Parkridge West Hospital (Jasper)
Tennova Healthcare-McNairy Regional (Selmer)
Copper Basin Medical Center (Copperhill)
McKenzie Regional Hospital
Jamestown Regional Medical Center
Takoma Regional Hospital (Greeneville)
Decatur County General Hospital (Parsons)
Texas
Wise Regional Health System-Bridgeport
Shelby Regional Medical Center
Renaissance Hospital Terrell
East Texas Medical Center-Mount Vernon
East Texas Medical Center-Clarksville
East Texas Medical Center-Gilmer
Good Shepherd Medical Center (Linden)
Lake Whitney Medical Center (Whitney)
Hunt Regional Community Hospital of Commerce
Gulf Coast Medical Center (Wharton)
Nix Community General Hospital (Dilley)
Weimar Medical Center
Care Regional Medical Center (Aransas Pass)
East Texas Medical Center-Trinity
Little River Healthcare Cameron Hospital
Little River Healthcare Rockdale Hospital
Stamford Memorial Hospital
Texas General-Van Zandt Regional Medical Center (Grand Saline)
Hamlin Memorial Hospital
Chillicothe Hospital
Central Hospital of Bowie
Virginia
Lee Regional Medical Center (Pennington Gap)
Pioneer Community Hospital of Patrick County (Stuart)
Mountain View Regional Hospital (Norton)
West Virginia
Williamson Memorial Hospital
Fairmont Regional Medical Center
Wisconsin
Franciscan Skemp Medical Center (Arcadia)
After criticism, HHS directs $25B in CARES funding to Medicaid providers, safety net hospitals
Dive Brief:
- HHS announced Tuesday it will deliver $25 billion to providers and hospitals that serve the nation’s most vulnerable patients, or those with Medicaid and Children’s Health Insurance Program coverage. Of that, $15 billion will go to providers that primarily serve Medicaid and CHIP patients while the other $10 billion is reserved for safety net hospitals that usually operate on razor-thin margins. A total of 758 safety net hospitals will receive direct deposits, and the administration noted that many of these facilities are operating in the red with an average profit margin of -7%.
- Not all Medicaid providers received Coronavirus Aid, Relief, and Economic Security funding from the initial general distribution. This targeted allocation is designed to make up for that by distributing money to the remaining 38% of Medicaid and CHIP providers who were left out of the first tranche.
- These Medicaid providers will receive at least 2% of reported gross patient revenue, but could receive more depending on how many patients they serve. HHS will make a final determination once providers start submitting data to the relief portal.
Dive Insight:
The industry has been clamoring for HHS to target funding to Medicaid providers amid the COVID-19 pandemic and the downturn in business, noting these organizations are already on fragile ground.
Last week the American Hospital Association pleaded for the administration to release $50 billion more for all hospitals, with $10 billion reserved for providers with a heavy caseload of Medicaid patients.
HHS answered the hospital lobby’s call — in part. HHS will distribute funds to safety net providers — more than AHA asked for — but disclosed no plans Tuesday to broaden that funding to all hospitals. America’s Essential Hospitals, which represents safety net providers, had also called for the quick release of targeted funding.
“Our goal for all these distributions has been to get the money to the providers who need it most as soon as possible,” Eric Hargan, HHS deputy secretary, said Tuesday during a call with reporters.
However, some have been critical of how the administration decided to allocate the first few waves of funding.
Congress has earmarked a total of $175 billion in funding for providers through two pieces of legislation, including the CARES Act.
To get the money out the door quickly, the first tranche was sent to providers based on the Medicare fee-for-service business, and later on the net patient service revenue.
These formulas put certain providers at an advantage, which tend to be for-profit hospitals with higher-margins, or those who were already well off heading into the pandemic, according to a recent Kaiser Family Foundation analysis.
This targeted funding was not swift, one reason for the delay was the challenge in getting a list of Medicaid providers from the states to validate and authenticate those who came to the portal to apply for funds, according to a senior HHS official.
Still, providers that have already received funds have noted that it comes with its own set of headaches. Some have decided to return the funds as navigating the legal and compliance issues may not be worth the hassle.
Though, that’s likely not the case for these safety net hospitals and providers.
Hospitals Got Bailouts and Furloughed Thousands While Paying C.E.O.s Millions
Dozens of top recipients of government aid have laid off, furloughed or cut the pay of tens of thousands of employees.
HCA Healthcare is one of the world’s wealthiest hospital chains. It earned more than $7 billion in profits over the past two years. It is worth $36 billion. It paid its chief executive $26 million in 2019.
But as the coronavirus swept the country, employees at HCA repeatedly complained that the company was not providing adequate protective gear to nurses, medical technicians and cleaning staff. Last month, HCA executives warned that they would lay off thousands of nurses if they didn’t agree to wage freezes and other concessions.
A few weeks earlier, HCA had received about $1 billion in bailout funds from the federal government, part of an effort to stabilize hospitals during the pandemic.
HCA is among a long list of deep-pocketed health care companies that have received billions of dollars in taxpayer funds but are laying off or cutting the pay of tens of thousands of doctors, nurses and lower-paid workers. Many have continued to pay their top executives millions, although some executives have taken modest pay cuts.
The New York Times analyzed tax and securities filings by 60 of the country’s largest hospital chains, which have received a total of more than $15 billion in emergency funds through the economic stimulus package in the federal CARES Act.
The hospitals — including publicly traded juggernauts like HCA and Tenet Healthcare, elite nonprofits like the Mayo Clinic, and regional chains with thousands of beds and billions in cash — are collectively sitting on tens of billions of dollars of cash reserves that are supposed to help them weather an unanticipated storm. And together, they awarded the five highest-paid officials at each chain about $874 million in the most recent year for which they have disclosed their finances.
At least 36 of those hospital chains have laid off, furloughed or reduced the pay of employees as they try to save money during the pandemic.
Industry officials argue that furloughs and pay reductions allow hospitals to keep providing essential services at a time when the pandemic has gutted their revenue.
But more than a dozen workers at the wealthy hospitals said in interviews that their employers had put the heaviest financial burdens on front-line staff, including low-paid cafeteria workers, janitors and nursing assistants. They said pay cuts and furloughs made it even harder for members of the medical staff to do their jobs, forcing them to treat more patients in less time.
Even before the coronavirus swept America, forcing hospitals to stop providing lucrative nonessential surgery and other services, many smaller hospitals were on the financial brink. In March, lawmakers sought to address that with a vast federal economic stimulus package that included $175 billion for the Department of Health and Human Services to hand out in grants to hospitals.
But the formulas to determine how much money hospitals receive were based largely on their revenue, not their financial needs. As a result, hospitals serving wealthier patients have received far more funding than those that treat low-income patients, according to a study by the Kaiser Family Foundation.
One of the bailout’s goals was to avoid job losses in health care, said Zack Cooper, an associate professor of health policy and economics at Yale University who is a critic of the formulas used to determine the payouts. “However, when you see hospitals laying off or furloughing staff, it’s pretty good evidence the way they designed the policy is not optimal,” he added.
The Mayo Clinic, with more than eight months of cash in reserve, received about $170 million in bailout funds, according to data compiled by Good Jobs First, which researches government subsidies of companies. The Mayo Clinic is furloughing or reducing the working hours of about 23,000 employees, according to a spokeswoman, who was among those who went on furlough. A second spokeswoman said that Mayo Clinic executives have had their pay cut.
Seven chains that together received more than $1.5 billion in bailout funds — Trinity Health, Beaumont Health and the Henry Ford Health System in Michigan; SSM Health and Mercy in St. Louis; Fairview Health in Minneapolis; and Prisma Health in South Carolina — have furloughed or laid off more than 30,000 workers, according to company officials and local news reports.
The bailout money, which hospitals received from the Health and Human Services Department without having to apply for it, came with few strings attached.
Katherine McKeogh, a department spokeswoman, said it “encourages providers to use these funds to maintain delivery capacity by paying and protecting doctors, nurses and other health care workers.” The legislation restricts hospitals’ ability to use the bailout funds to pay top executives, although it doesn’t stop recipients from continuing to award large bonuses.
The hospitals generally declined to comment on how much they are paying their top executives this year, although they have reported previous years’ compensation in public filings. But some hospitals furloughing front-line staff or cutting their salaries have trumpeted their top executives’ decisions to take voluntary pay cuts or to contribute portions of their salary to help their employees.
The for-profit hospital giant Tenet Healthcare, which has received $345 million in taxpayer assistance since April, has furloughed roughly 11,000 workers, citing the financial pressures from the pandemic. The company’s chief executive, Ron Rittenmeyer, told analysts in May that he would donate half of his salary for six months to a fund set up to assist those furloughed workers.
But Mr. Rittenmeyer’s salary last year was a small fraction of his $24 million pay package, which consists largely of stock options and bonuses, securities filings show. In total, he will wind up donating roughly $375,000 to the fund — equivalent to about 1.5 percent of his total pay last year.
A Tenet spokeswoman declined to comment on the precise figures.
The chief executive at HCA, Samuel Hazen, has donated two months of his salary to a fund to help HCA’s workers. Based on his pay last year, that donation would amount to about $237,000 — or less than 1 percent — of his $26 million compensation.
“The leadership cadre of these organizations are going to need to make sacrifices that are commensurate with the sacrifices of their work force, not token sacrifices,” said Jeff Goldsmith, the president of Health Futures, an industry consulting firm.
Many large nonprofit hospital chains also pay their senior executives well into the millions of dollars a year.
Dr. Rod Hochman, the chief executive of the Providence Health System, for instance, was paid more than $10 million in 2018, the most recent year for which records are available. Providence received at least $509 million in federal bailout funds.
A spokeswoman, Melissa Tizon, said Dr. Hochman would take a voluntary pay cut of 50 percent for the rest of 2020. But that applies only to his base salary, which in 2018 was less than 20 percent of his total compensation.
Some of Providence’s physicians and nurses have been told to prepare for pay cuts of at least 10 percent beginning in July. That includes employees treating coronavirus patients.
Stanford University’s health system collected more than $100 million in federal bailout grants, adding to its pile of $2.4 billion of cash that it can use for any purpose.
Stanford is temporarily cutting the hours of nursing staff, nursing assistants, janitorial workers and others at its two hospitals. Julie Greicius, a spokeswoman for Stanford, said the reduction in hours was intended “to keep everyone employed and our staff at full wages with benefits intact.”
Ms. Greicius said David Entwistle, the chief executive of Stanford’s health system, had the choice of reducing his pay by 20 percent or taking time off, and chose to reduce his working hours but “is maintaining his earning level by using paid time off.” In 2018, the latest year for which Stanford has disclosed his compensation, Mr. Entwistle earned about $2.8 million. Ms. Greicius said the majority of employees made the same choice as Mr. Entwistle.
HCA’s $1 billion in federal grants appears to make it the largest beneficiary of health care bailout funds. But its medical workers have a long list of complaints about what they see as penny-pinching practices.
Since the pandemic began, medical workers at 19 HCA hospitals have filed complaints with the Occupational Safety and Health Administration about the lack of respirator masks and being forced to reuse medical gowns, according to copies of the complaints reviewed by The Times.
Ed Fishbough, an HCA spokesman, said that despite a global shortage of masks and other protective gear, the company had “provided appropriate P.P.E., including a universal masking policy implemented in March requiring all staff in all areas to wear masks, including N95s, in line with C.D.C. guidance.”
Celia Yap-Banago, a nurse at an HCA hospital in Kansas City, Mo., died from the virus in April, a month after her colleagues complained to OSHA that she had to treat a patient without wearing protective gear. The next month, Rosa Luna, who cleaned patient rooms at HCA’s hospital in Riverside, Calif., also died of the virus; her colleagues had warned executives in emails that workers, especially those cleaning hospital rooms, weren’t provided proper masks.
Around the time of Ms. Luna’s death, HCA executives delivered a warning to officials at the Service Employees International Union and National Nurses United, which represent many HCA employees. The company would lay off up to 10 percent of their members, unless the unionized workers amended their contracts to incorporate wage freezes and the elimination of company contributions to workers’ retirement plans, among other concessions.
Nurses responded by staging protests in front of more than a dozen HCA hospitals.
“We don’t work in a jelly bean factory, where it’s OK if we make a blue jelly bean instead of a red one,” said Kathy Montanino, a nurse treating Covid-19 patients at HCA’s Riverside hospital. “We are dealing with people’s lives, and this company puts their profits over patients and their staff.”
Mr. Fishbough, the spokesman, said HCA “has not laid off or furloughed a single caregiver due to the pandemic.” He said the company had been paying medical workers 70 percent of their base pay, even if they were not working. Mr. Fishbough said that executives had taken pay cuts, but that the unions had refused to take similar steps.
“While we hope to continue to avoid layoffs, the unions’ decisions have made that more difficult for our facilities that are unionized,” he said. The dispute continues.
Apparently anticipating a strike, a unit of HCA recently created “a new line of business focused on staffing strike-related labor shortages,” according to an email that an HCA recruiter sent to nurses.
The email, reviewed by The Times, said nurses who joined the venture would earn more than they did in their current jobs: up to $980 per shift, plus a $150 “Show Up” bonus and a continental breakfast.
Cartoon – Message from Corporate on Need to Cut More Operating Expenses
29 hospital bankruptcies in 2020
https://www.beckershospitalreview.com/finance/29-hospital-bankruptcies-in-2020.html?utm_medium=email
From reimbursement landscape challenges to dwindling patient volumes, many factors lead hospitals to file for bankruptcy. At least 29 hospitals across the U.S. have filed for bankruptcy this year, and the financial challenges caused by the COVID-19 pandemic may force more hospitals to enter bankruptcy in coming months.
COVID-19 has created a cash crunch for many hospitals across the nation. They’re estimated to lose $200 billion between March 1 and June 30, according to a report from the American Hospital Association. More than $161 billion of the expected revenue losses will come from canceled services, including nonelective surgeries and outpatient treatment. Moody’s Investors Service said the sharp declines in revenue and cash flow caused by the suspension of elective procedures could cause more hospitals to default on their credit agreements this year than in 2019.
The hospitals that have filed for bankruptcy this year, which are part of the health systems listed below, have not cited the pandemic as a factor that pushed them into bankruptcy. Though most of the hospitals are operating as normal throughout the bankruptcy process, at least two of the hospitals that entered bankruptcy this year have shut down.
Quorum Health
Brentwood, Tenn.-based Quorum Health and its 23 hospitals filed for Chapter 11 bankruptcy April 7. The company, a spinoff of Franklin, Tenn.-based Community Health Systems, said the bankruptcy filing is part of a plan to recapitalize the business and reduce its debt load.
Randolph Health
Randolph Health, a single-hospital system based in Asheboro, N.C., filed for Chapter 11 bankruptcy March 6. Randolph Health leaders have taken several steps in recent years to improve the health system’s financial picture, and they’ve made progress toward that goal. Entering Chapter 11 bankruptcy will allow Randolph Health to restructure its debt, which officials said is necessary to ensure the health system continues to provide care for many more years.
Faith Community Health System
Faith Community Health System, a single-hospital system based in Jacksboro, Texas, filed for bankruptcy protection on Feb. 29. The health system, part of the Jack County (Texas) Hospital District, entered Chapter 9 bankruptcy — a bankruptcy proceeding that offers distressed municipalities protection from creditors while a repayment plan is negotiated.
Pinnacle Healthcare System
Overland Park, Kan.-based Pinnacle Healthcare System and its hospitals in Missouri and Kansas filed for Chapter 11 bankruptcy on Feb. 12. Pinnacle Regional Hospital in Boonville, Mo., formerly known as Cooper County Memorial Hospital, entered bankruptcy about a month after it abruptly shut down. Pinnacle Regional Hospital in Overland Park, formerly called Blue Valley Hospital, closed about two months after entering bankruptcy.
Thomas Health
South Charleston, W.Va.-based Thomas Health and its two hospitals filed for Chapter 11 bankruptcy on Jan. 10. In an affidavit filed in the bankruptcy case, Thomas Health President and CEO Daniel J. Lauffer cited several reasons the health system is facing financial challenges, including reduced reimbursement rates and patient outmigration. The health system said the bankruptcy process will help it address its long-term debt and pursue strategic opportunities.
HENRY KOTULA 