Category Archives: Hospital

COVID-19 to cost hospitals $323 billion, American Hospital Association says

Posted on by • Posted in American Hospital Association (AHA), Cash, Cash Reserves, Coronavirus, Crisis, Crisis Management, Economic Crisis, Economic Recovery, Economic Stimulus, Economy Reopening, Health System, Hospital, Hospital Industry, Liquidity, Net Income, Nonoperating Income, Operating Expenses, Operating Income, Operating Margin, Operating Performance, Operating Revenue, Pandemic, Reorganization, Restructure • Leave a comment

https://www.beckershospitalreview.com/finance/covid-19-to-cost-hospitals-323-billion-american-hospital-association-says.html?utm_medium=email

Catastrophic financial impact of COVID-19 expected to top $323 ...

Hospitals will lose $323.1 billion this year because of the COVID-19 pandemic, according to a new report from the American Hospital Association. 

The total includes $120.5 billion in financial losses the association predicts hospitals will see from July through December on top of $202.6 billion in losses they estimated between March and June. The losses are in large part due to lower patient volumes.

“While potentially catastrophic, these projected losses still may underrepresent the full financial losses hospitals will face in 2020, as the analysis does not account for currently increasing case rates in certain states, or potential subsequent surges of the pandemic occurring later this year,” the AHA said.

Hospitals and health systems are reporting an average decline of 19.5 percent in inpatient volume and 34.5 percent in outpatient volume when compared to baseline levels from last year. Most hospitals don’t expect to return to last year’s levels in 2020.

Read the full report here.

 

 

 

Six months in, coronavirus failures outweigh successes

Posted on by • Posted in 2020 Election Issues, Centers for Disease Control & Prevention (CDC), Clinical Testing, Contact Tracing, Coronavirus, Crisis, Crisis Management, Economic Crisis, Economic Recovery, Economy Reopening, Health Policy, Health System, Hospital, Hospital Industry, Infection Control, Infection Control Plan, Infectious Virus, Intensive Care (ICU), Leadership Decentralized, Mislead, Misleading, Mortality, Pandemic, Pandemic Fatigue, Personal Protective Equipment (PPE), Public Health, Public Safety, Quarantine, Scientists, Social Distancing, Supply Chain, Urgency, World Health Organization (WHO) • Leave a comment

Six months in, coronavirus failures outweigh successes

Covid-19 news: UK deaths fall below five-year average | New Scientist

In the six months since the World Health Organization (WHO) detected a cluster of atypical pneumonia cases at a hospital in Wuhan, China, the coronavirus pandemic has touched every corner of the globe, carving a trail of death and despair as humankind races to catch up.

At least 10.4 million confirmed cases have been diagnosed worldwide, and the true toll is likely multiples of that figure. In the United States, health officials believe more than 20 million people have likely been infected.

A staggering 500,000 people around the globe have died in just six months. More people have succumbed to the virus in the U.S. — 126,000 — than the number of American troops who died in World War I.

But even after months of painful lockdowns worldwide, the virus is no closer to containment in many countries. Public health officials say the pandemic is getting worse, fueled by new victims in both nations that have robust medical systems and poorer developing countries.

“We all want this to be over. We all want to get on with our lives. But the hard reality is this is not even close to being over,” WHO Director-General Tedros Adhanom Ghebreyesus said Monday. “Globally, the pandemic is actually speeding up.”

In the U.S., the fierce urgency of March and April has given way to the complacency of summer, as bars and restaurants teem with young people who appear largely convinced the virus poses no threat to them. New outbreaks, especially among younger Americans, have forced 16 states to pause or roll back their reopening plans.

“This is a really challenging point in time. It’s challenging because people are tired of the restrictions on their activity, people are tired of not being able to socialize, not being able to go to work,” said Richard Besser, a former acting director of the Centers for Disease Control and Prevention (CDC) who now heads the Robert Wood Johnson Foundation.

“You have people who have reached that point of pandemic fatigue where they just don’t want to hear it anymore, they just want to go back to their life,” he added.

The number of new U.S. cases has risen sharply in recent weeks, led disproportionately by states in the South, the Midwest and the Sun Belt. More than a quarter-million people tested positive for the coronavirus last week, and more than 40,000 tested positive on three consecutive days over the weekend.

“We are now having 40-plus thousand new cases a day. I would not be surprised if we go up to 100,000 a day if this does not turn around. And so I am very concerned,” Anthony Fauci, director of the National Institute for Allergy and Infectious Diseases, told a Senate panel on Tuesday.

Public health experts now worry that a rising tide of death is about to crest across the United States. Officials in Alabama, Arizona, California, Mississippi and Texas are reporting a surging number of COVID-19 hospitalizations, leading to fears that health systems could soon be overrun.

“If you’re over the hospital capacity, people will start dying faster,” said Eric Feigl-Ding, an epidemiologist and health economist at the Harvard T.H. Chan School of Public Health and a senior fellow at the Federation of American Scientists.

Already, Arizona has reported more coronavirus deaths per million residents in the last week, at 4.77, than any nation on Earth except Chile and Peru.

The response to the coronavirus pandemic has varied widely, and in some parts of the world, both wealthy and developing nations have brought it under control. In the U.S., some states hit hard early on have wrangled transmission under control.

But even in states that have achieved some measure of success, the spikes in cases stand in stark contrast to countries that have bent the epidemiological curves to manageable levels.

Mass screenings in South Korea crushed the spread, and quick action to identify and isolate contacts in more recent hot spots have meant new outbreaks are quickly contained. South Korea, with a population of 51 million, has reported just 316 new cases in the past week, fewer than the number of new cases reported in Rhode Island, a state with slightly more than 1 million residents.

Germany raced to protect its elderly population and rapidly expanded its hospital capacity. It deployed the world’s most successful diagnostics test, developed at a Berlin hospital, on a massive scale. With a population of 83 million, the country has reported 78 coronavirus deaths in the past week; Mississippi, population 3 million, reported 96 coronavirus-related deaths during the same period.

Vietnam imposed mandatory quarantines on contacts, including international travelers, in government-run centers to stop the spread. Among its 95 million residents, Vietnam has confirmed 355 total cases since the outbreak began. Alabama, population 4.9 million, reported 358 cases on Sunday alone.

Those countries have begun loosening restrictions on their populations and their economies, with few signs of major flare-ups.

The United States has begun to open up too but without bending the curve downward, and the results have been disastrous. The number of daily confirmed cases has more than doubled in nine states over the past two weeks and has increased by more than half in 17 more.

“I have really grave concerns that viral transmission is going to get out of control,” Besser said.

In interviews, public health experts and epidemiologists confess to feelings of depression and disgust over the state of the nation’s response. Some remain exasperated that there is still no coordinated national response from the White House or federal agencies.

President Trump has rarely mentioned the virus in recent weeks, aside from using racial epithets and suggesting his administration would slow testing to reduce the number of confirmed cases. He later said he was joking.

“There should be some sort of federal leadership,” Feigl-Ding said. “Every state’s on its own, for the most part.”

Left to their own devices, some states are trending in the right direction. Connecticut, Maryland, New Hampshire, New York, North Dakota, Rhode Island, South Dakota and the District of Columbia have seen their case counts decline for two consecutive weeks or more. New York reported 4,591 new cases in the last week — a startlingly high figure but only a fraction of the 65,000 cases infecting the state during its worst week, in early April.

States with their numbers on the decline have benefited from fast action and strict measures. They’re also viewed as role models for states that are now experiencing surges.

“States who are now on the rapid upslope need to act quickly, take the advice and example of states that have already been through this,” said Abraar Karan, an internist at Brigham and Women’s Hospital and Harvard Medical School. “We know what needs to be done to win this in the short run, and we are working on what needs to happen for the longer term.”

If there is a silver lining, it is that the number of tests American states are conducting on a daily basis has grown to about 600,000, on its way toward the millions the nation likely needs to fully control the spread.

But that silver lining frames a darkening cloud: As the virus spreads, even the higher testing capacity has been strained, and state and local governments are hitting their limits and running low on supplies.

The greater number of tests does not account for the speed of the spread, as Trump has suggested. The share of tests that come back positive has averaged almost 7 percent over the last week, according to The Hill’s analysis of national figures; in the first week of June, just 4.6 percent of tests were coming back positive.

If greater testing were responsible for more cases, the percentage coming back positive should decrease rather than increase. The higher positive rates are an indication the virus is spreading more rapidly.

As with so much else in American life, the coronavirus has become a political battleground. The new front is over face masks, which studies show dramatically reduce transmission. States that have mandated wearing masks in public saw the number of new cases decline by a quarter between the first and third weeks of June; states that do not require masks in any setting saw the number of cases rise by 84 percent over that same span.

“From a public health perspective, it’s demoralizing, it’s tragic … because our public health leaders know what to do to get this under control, but we’re in a situation where the CDC is not out front in a leadership role. We’re not hearing from them every day. They’re not explaining and capturing people’s hearts and minds,” said Besser, the former CDC chief. “If we have a vaccine, that will be terrific if it’s safe and effective. But until that point, these are the only tools we have, these tools of public health, and they’re very crude tools.”

 

 

 

 

 

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.

 

DOJ charges execs, others with elaborate $1.4B billing scheme using rural hospitals

Posted on by • Posted in Board, Dept of Justice (DOJ), Fraud, Fraud and Abuse, Health System, Hospital, Hospital Industry, Indictment, Kickbacks, Laboratory, Laboratory Industry, Leadership, Management Company, Rev Cycle Management, Revenue Cycle, Rural Health, Rural Hospital, Substance Abuse, Vulnerable Populations, Workers Compensation • Leave a comment

https://www.healthcaredive.com/news/doj-charges-execs-others-with-elaborate-14b-billing-scheme-using-rural-h/580785/

Office of Attorney Recruitment & Management | Department of Justice

Dive Brief:

  • The U.S. Department of Justice is charging 10 defendants for an “elaborate” pass-through billing scheme that used small rural hospitals across three states as shells to submit fraudulent claims for laboratory testing to commercial insurers, jacking up reimbursement.
  • The defendants, including hospital executives, lab owners and recruiters, billed private payers roughly $1.4 billion from November 2015 to February 2018 for pricey lab testing, reaping $400 million.
  • The four rural hospitals used in the scheme are: Cambellton-Graceville Hospital, a 25-bed rural facility in Florida; Regional General Hospital of Williston, a 40-bed hospital in Florida; Chestatee Regional Hospital, a 49-bed facility in Georgia; and Putnam County Memorial Hospital, a 25-bed hospital in Missouri. Only Putnam emerged from the scheme relatively unscathed: Chestatee was sold to a health system that plans to replace it with a newer facility, Cambellton-Graceville closed in 2017 and RGH of Williston was sold for $100 to an accounting firm earlier this month.

Dive Insight:

The indictment, filed in the Middle District of Florida and unsealed Monday, alleges the 10 defendants, using management companies they owned, would take over rural hospitals often struggling financially. They would then bill commercial payers for millions of dollars for pricey urine analysis drug tests and blood tests through the rural hospitals, though the tests were normally conducted at outside labs, and launder the money to hide their trail and distribute proceeds.

The rural hospitals had negotiated rates with commercial insurers for higher reimbursement for tests than if they’d been run at an outside labs, so the facilities were used as a shell for fraudulent billing for often medically unnecessary tests, the indictment alleges.

The defendants, aged 34 to 60, would get urine and other samples by paying kickbacks to recruiters and healthcare providers, like sober homes and substance abuse treatment centers.

Screening urine tests, to determine the presence or absence of a substance in a patient’s system, is generally inexpensive and simple — it can be done at a substance abuse facility, a doctor’s office or a lab. But confirmatory tests, to identify concentration of a drug, are more precise and sensitive and have to be done at a sophisticated lab.

As such they’re more expensive and are typically reimbursed at higher rates than screening urine tests. None of the rural hospitals had the capacity to conduct confirmatory tests, or blood tests, on a large scale, but frequently billed in-network insurers, including CVS Health-owned Aetna, Florida Blue and Blue Cross Blue Shield of Georgia, for the service from 2015 to 2018, the indictment says.

Rural hospitals are facing unprecedented financial stress amid the pandemic, but have been fighting to keep their doors open for years against shrinking reimbursement and lowering patient volume. That can give bad actors an opportunity to come in and assume control.

One of the defendants, Jorge Perez, 60, owns a Miami-based hospital operator called Empower, which has seen many of its facilities fail after insurers refused to pay for suspect billing. Half of rural hospital bankruptcies last year were affiliated with Empower, which controlled 18 hospitals across eight states at the height of the operation. Over the past two years, 12 of the hospitals have declared bankruptcy. Eight have closed, leaving their rural communities without healthcare and a source of jobs.

“Schemes that exploit rural hospitals are particularly egregious as they can undermine access to care in underserved communities,” Thomas South, a deputy assistant inspector general in the Office of Personnel Management Office of Inspector General, said in a statement.

 

 

 

 

 

Trinity Health expects $2B revenue plunge as it cuts, furloughs more staff

Posted on by • Posted in 2020 Election Issues, Cash, Cash Reserves, Coronavirus, Crisis, Crisis Management, Deferred Healthcare, Economic Crisis, Economic Recovery, Economy Reopening, Employee Benefits, Employee Furlough, Employee Hiring Freeze, Employee Layoffs, Employee Pay Cuts, Employer-Based Health Insurance, Health Insurance Coverage Adequacy, Health System, High Deductible Health Plans, Hospital, Hospital Industry, Job, Job Market, Job Search, Job Security, Liquidity, Market Outlook, Market Trends, Market Uncertainty, Net Income, Nonoperating Income, Operating Expenses, Operating Income, Operating Margin, Operating Performance, Operating Revenue, Out of Pocket Expenses, Pandemic, Public Health, Public Safety, Quarantine, Restructure, Social Distancing, Turnaround, Turnaround Plan, Underinsured, Unemployment, Unemployment Insurance, Uninsured • Leave a comment

https://www.healthcaredive.com/news/trinity-health-cutting-cost-cutting-2-billion-revenue-shortfall/580738/

The Dumbest Things You Can Do With Your Money | Work + Money

Dive Brief:

  • Trinity Health, one of the nation’s largest nonprofit health systems, said Monday it will take more measures to cut costs due to the downturn spurred by the novel coronavirus. The restructuring plan includes eliminating positions, extending furloughs, severances and reductions in schedules. The decisions are being “customized” across the system based on factors that include volume projections and the cost and revenue challenges in each market.
  • The Livonia, Michigan-based hospital operator said it continues to treat COVID-19 patients, however, it has “for now seen declining numbers of very sick patients with COVID-19.”
  • The system said it expects revenue to be depressed or “below historical levels” for the remainder of this fiscal year and much of the next. It projects revenue to drop by $2 billion to $17.3 billion for fiscal year 2021, which starts after its June 30 year end.

Dive Insight:

In May, Trinity said it planned to furlough nearly 12% of its workforce — or 15,000 employees out of the 125,000 nationally.  

Trinity, one of the nation’s largest hospital operators with 92 facilities and operations across 22 states, is now broadening that restructuring, extending and adding new furloughs.

In a Monday bond filing, Trinity said its operations were “significantly” impacted by the effects of the pandemic as many operators saw depressed volumes due to shelter-in-place orders, which started in most of Trinity’s markets during the last two weeks of March.

“The effect of COVID-19 on the operating margins and financial results of Trinity Health is adverse and significant and, at this point, the duration of the pandemic and the length of time until Trinity Health returns to normal operations is unknown,” according to Monday’s bond filing.

The system said relief funds provided by the federal government have not been enough to cover its operating losses. Trinity has received $600 million in relief funds that do not have to be repaid and more in loans through the advanced Medicare payment program, according to a previous analysis by Healthcare Dive.

Still, the system said it has drawn on credit facilities totaling $1 billion to provide adequate liquidity during the pandemic. Trinity reported having 178 days cash on hand as of March 30.

Some nonprofits are faring better than Trinity and pulling back on earlier staffing cuts.

Mayo Clinic said last week it will call back its furloughed workers by the end of August and restore pay that had been cut due to the pandemic.

Mayo has some of the most cash on hand in terms of days when comparing other major nonprofit systems. Mayo had 252 days of cash on hand as of March 30, more than the other 20 largest nonprofits except Cleveland Clinic and New York-Presbyterian.

 

 

Outsourcing A Hospital Turnaround And The Team Involved

Posted on by • Posted in Board, C-Suite, CEO, CFO, Execution, Health System, Honesty, Hospital, Hospital Industry, Integrity, Interim CFO, Interim Executives, Interim Resources, Judgement, Leadership, Objectivity, Outsourcing, Trust, Truth, Turnaround, Turnaround Plan • Leave a comment

https://www.healthtechs3.com/outsourcing-a-hospital-turnaround-and-the-team-involved/

Outsourcing A Hospital Turnaround and The Team Involved - HealthTechS3

Hospitals are constantly faced with challenges that require them to reassess how they deliver care to their communities.  Continuous improvement is necessary as expense inflation consistently outpaces reimbursement gains.  However, more fundamental issues threaten hospital fiscal viability such as payor mix deterioration, population or market share declines, and utilization changes. Amplify this environment with a difficult EMR installation and a “perfect storm” creates a fiscal crisis that necessitates a turnaround.

If covenants are breached, bond agreements often require an external and independent consulting firm that is engaged to help create and oversee the implementation of a turnaround plan.  Otherwise, a CEO must make a value judgment on whether to outsource the turnaround balancing cost considerations with an honest assessment of (1) their management team’s bandwidth, and (2) ability to prepare and execute a turnaround.

There are multiple models for outsourcing a turnaround.  In a complete outsourcing, an engagement letter with the “performance improvement” consulting firm would include an assessment phase and the preparation of a comprehensive plan that covers all areas of operations followed by implementation support services.  The firm may require an on-site presence of one year or more to assess, validate, and assist in the implementation of recommended interventions.  This can be effective, but the fees can easily reach seven figures even for modest community hospitals.  In addition, even in a complete outsourcing there is still a major demand on the time of senior leadership.  As a result, management sometimes chooses to limit the scope of a performance improvement engagement, which results in a partial outsource.  The limitation may be to only outsource the plan development in the form of a report.  This would detail the operational interventions and the implementation steps, but it would leave the heavy lifting of implementation to existing leadership.   Alternatively, the scope may be limited by excluding certain areas of review.  While there may be valid reasons for the latter approach, limiting the areas of review can be counterproductive to a turnaround plan because many issues are systemic such as patient throughput or revenue cycle.  Further, restricting certain areas for review may create the appearance of “untouchables” or “sacred cows,” which should be avoided in a turnaround.

While the CEO should always be the ultimate leader of the turnaround, the CFO is indispensable in the process whether it is fully or partially outsourced or done completely in-house.  These abilities are not always in the CFO’s skill set; some executives are most effective in a steady-state as opposed to a turnaround environment. The CEO will be relying on the CFO to demonstrate the following traits, which require a large degree of emotional intelligence:

  • Delegate some responsibility to their lieutenants but communicate the financial imperative and manage overall execution of the turnaround
  • Appropriately raise the alarm when progress is not being made. Too much alarm can be seen as crying wolf and too little can add to complacency.
  • Do not be averse to confrontation but do not create it where it is not necessary. Only use the CEO for those most difficult situations where it cannot be avoided to ensure execution remains on point.

Human nature dictates that self-interest may compromise the CFO’s objectivity.  There will be times when the best interest of the organization and the individual are in conflict.  If the incumbent CFO is not up to the task, replacing them with an interim CFO with turnaround experience is a better option.

An experienced interim CFO in a turnaround situation has several advantages.   First, it can afford the CEO the opportunity to underscore the urgency of the situation by making an example. The experienced interim CFO understands their primary role is to be a key asset in the execution of the turnaround.   They are not there to make friends but to influence people (although the best ones do both).  Because they are not angling for promotions or favor for future consideration from the board, they are apolitical, and their intentions are more transparent.  Having been through turnarounds before, they possess the tools to assist the CEO and the board navigates the ups and downs.  Perhaps most importantly, the interim CFO is in the best position to tell the CEO and the board things they may not want to hear such as the need to give up independence or consult bankruptcy counsel if the situation warrants.

Obviously, it is necessary that the hospital must continue to operate safely, securely, and legally during a turnaround.  This can be a difficult balancing act, not just for the CFO but for all senior management.  The CFO must continue to safeguard the assets of the organization.  Likewise, other members of senior management must push back if a turnaround plan may imperil patients, visitors or staff, or violate the law.  Consequently, it may be beneficial to bring in other interim C-Suite leaders who are able to effectively manage the multiple critical priorities during a turnaround in addition to, or instead of, an interim CFO.  However, this must be carefully weighed against continuity of management and the organization’s ability to attract and retain talent.  Senior management turnover creates stress on the organization and is ultimately a reflection on the CEO.

There is not a one-size-fits-all approach to creating and executing a turnaround plan.  Outsourcing to consulting firms can infuse new ideas and analytical talent, but it is expensive and still often leaves management with the bulk of the responsibilities.  Experienced interim management can add independence and objectivity to create a glidepath for execution.

 

 

 

 

Credit downgrades aren’t attributable to COVID-19 but cash flow will be a challenge

Posted on by • Posted in ACA, Cash, Cash Reserves, Coronavirus, Cost Management, Credit Quality, Credit Ratings, Crisis, Crisis Management, Debt Service, Debt Service Covenants, Economic Crisis, Economic Recovery, Economic Stimulus, Elective Procedures, Elective Surgery, Health Insurance Coverage Adequacy, Health Policy, Health System, High Deductible Health Plans, Hospital, Hospital Industry, Liquidity, Out of Pocket Expenses, Underinsured, Uninsured • Leave a comment

https://www.healthcarefinancenews.com/news/credit-downgrades-arent-attributable-covid-19-cash-flow-will-be-ongoing-challenge?mkt_tok=eyJpIjoiTUdSbVptVmhaR0ZpT0RJMyIsInQiOiJ2TVwvb3g5VWF4R05DeWFScVJ4U0lXeW9xWG1cL0pVMWo1RE1cL24rd21ySEErbk9kZWNIXC9hdmZYYmJBcGU1RDQ5MDVDNXVyZ2RZSWo2djRRSXhSOVFVQk1yNjFWOTVoVjlkTXVxXC95QXU1SU8yMEhJcEtHZXJ3ZDhDc2RMb2RcLzlMcSJ9

Just How Bad Is My Bad Credit Score? | Credit.com

The coronavirus is mainly affecting the credit outlook for the rest of the year and beyond as hospitals adapt to new financial realities.

While the COVID-19 coronavirus is likely to cause cash flow and liquidity issues for hospitals through the end of the year and into 2021, the credit outlook for the healthcare industry isn’t as dire as some had feared. While there have been some downgrades this year, most of those are attributable to healthcare financial performance at the end of 2019.

At a virtual session of the Healthcare Financial Management Association on Wednesday, Lisa Goldstein, associate managing director at Moody’s Investors Service, said the agency is taking a measured approach to issuing credit ratings and will “triage” these ratings based on factors such as liquidity and cash flow.

“Changes are happening daily, and sometimes hourly with funding coming from the federal government,” said Goldstein, “so we’re taking a very measured approach.”

Healthcare is among the most volatile industries being affected by the coronavirus due to the fact that it operates like a business, with a general lack of government support to pay off debt.

Credit downgrades are on the rise, but there’s historical precedent at play. Looking at data beginning with the 2008 financial crisis, there were consistently more downgrades than upgrades in the healthcare industry, owing to its inherent volatility. It was and has generally been subject to public policy and competitive forces. In any given year, downgrades exceed upgrades.

After passage of the Affordable Care Act, however, the number of uninsured Americans hit an all-time low. Hospitals grew in occupancy and revenues improved. The situation started to worsen once more when it became clear that there was a national nursing shortage, as well as top-line revenue pressure from government and commercial payers lowering their rates, but credit downgrades didn’t truly explode until this year. There have been 24 downgrades so far this year, already exceeding the 13 downgrades in all of 2019.

The rub is that it’s not the coronavirus’s fault.

“Most downgrades were in the first quarter of the year,” said Goldstein. “We did have a lot of downgrades in March, which is when the pandemic really started – when it became a pandemic – but even though there were 11 downgrades in March, it was based on what we’d seen through the end of 2019. There were problems that were appearing that had nothing to do with the pandemic.”

Basic fundamental operating challenges were becoming more pronounced during that time. A decline in inpatient cases, a rapid rise in observation stays, a decline in outpatient cases to competing clinics and health centers, and staffing and productivity challenges all contributed to material increases in debt.

COVID-19’s effects on hospital credit ratings are in the outlook for the rest of the year and beyond. Interestingly, in March, Moody’s changed its outlook from negative to stable.

“We haven’t seen anything like this,” said Goldstein. “The industry has been through shocks, but something this long in duration has been something we think will have an impact on financial performance going forward.”

Moody’s anticipates cash flow will remain low into 2021, mostly from the suspension of elective surgeries, rising staffing expenses and uncertainty around securing enough personal protective equipment. Liquidity is still a concern, but is more of a side issue due to Medicare funding providing a Band-Aid of sorts. The CARES act will help to fill some of that gap, but not all of it, said Goldstein.

She added that the $175 billion in stimulus funding is favorable, but modestly so, since it is estimated to cover only about two months’ worth of spending. The good news is that the opportunity to apply for grant money, which doesn’t have to be repaid, can help to fill some of the gap.

Some hospital leaders are concerned that if they violate covenants – also known as a technical default – their credit outlook will be downgraded. Goldstein sought to assuage those concerns.

“Debt service covenants are expected to rise, but an expected covenant breach or violation won’t have an impact on credit quality because it’s driven by an unusual event happening,” she said. “It doesn’t speak to your fundamental history as an operating entity.”

 

 

Houston ICUs at 97 Percent Capacity as Texas Coronavirus Cases Break Records

Posted on by • Posted in Clinical Testing, Contact Tracing, Coronavirus, Crisis, Crisis Management, Economic Crisis, Economy Reopening, Health System, Hospital, Hospital Industry, Infection Control, Infection Control Plan, Infectious Virus, Intensive Care (ICU), Mortality, Pandemic, Personal Protective Equipment (PPE), Public Health, Public Safety, Quarantine, Social Distancing • Leave a comment

https://www.newsweek.com/houston-icus-90-percent-capacity-texas-coronavirus-cases-break-records-1513077

Coronavirus Briefing: What Happened Today - The New York Times

Almost all intensive care unit beds at Houston hospitals were occupied on Wednesday as Texas reported a record number of statewide patient admissions related to the novel coronavirus.

During a City Council meeting Wednesday morning, Houston Mayor Sylvester Turner said 97 percent of the city’s ICU beds were filled. A report from the Texas Medical Center (TMC) said 27 percent of those beds were occupied by COVID-19 patients.

According to data published earlier this week by the TMC, a network of health care and research institutions based in Houston, 90 percent of the city’s ICU beds were filled as of Monday. Virus patients accounted for more than one-quarter of those occupancies.

The TMC’s latest report incorporated ICU admission numbers from seven affiliate hospitals in the Houston area: CHI St. Luke’s Health, Harris Health System, Houston Methodist, MD Anderson Cancer Center, Memorial Hermann, Texas Children’s Hospital and University of Texas Medical Branch. The hospitals can collectively admit 1,330 ICU patients at regular capacity, when 70 to 80 percent of total beds are typically occupied, according to the TMC.

The TMC’s Monday report noted that an additional 373 beds could become available under its “sustainable surge” plan, a procedure that would indefinitely increase ICU capacities as needed during the pandemic. Another 504 beds could be added to Houston ICUs under an emergency “unsustainable surge” plan, which the TMC would implement to address a “significant, temporary” influx of patients, according to its report.

Houston’s heightened ICU admissions were reported as cases and hospitalizations related to the coronavirus are spiking throughout Texas. Ongoing data released by the Texas Department of State Health Services show that of all the state’s regions, the Houston area is one of the hardest hit in terms of virus incidence and hospital admissions. The latest DSHS data estimated that 179 ICU beds were available at medical facilities located in the Greater Houston area as of Tuesday afternoon.

The number of patients hospitalized with the virus peaked in Texas on Tuesday, as the DSHS confirmed more than 4,000 current admissions. The state has set new records for hospitalizations related to COVID-19 every day since June 12, when 2,166 patients were reported.

On Monday, the Houston Health Department said hospitalizations due to the virus had increased 177 percent throughout the surrounding county since May 31. It also noted a 64 percent increase in ICU patients who had tested positive for the virus.

Texas also saw its highest daily increase in virus cases on Wednesday, with 5,489 new diagnoses confirmed. The latest single-day record surpassed its previous high of 4,430 new cases reported last Saturday. Cumulative diagnosis data reflected in graphics published by the DSHS show a sharp upturn in cases reported statewide since the start of June, when about 64,800 total cases were confirmed. As of Tuesday afternoon, the number had risen to more than 120,300. The DSHS estimated that roughly 47,400 of those cases remain active.

Businesses in Texas started to reopen at the beginning of May. Although Texas Governor Greg Abbott has not required residents to wear face masks in the state’s public spaces during the reopening process, he did encourage people to do so earlier this week in response to increasing case counts and hospitalizations.

“Wearing a mask will help us to keep Texas open. Not taking action to slow the spread will cause COVID to spread even worse, risking people’s lives and ultimately leading to the closure of more businesses,” he said during a news conference on Monday.

 

 

Penn State Health to acquire hospital from Geisinger

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https://www.beckershospitalreview.com/hospital-transactions-and-valuation/penn-state-health-to-acquire-hospital-from-geisinger.html?utm_medium=email

Penn State Health to acquire Geisinger Holy Spirit | ABC27

Penn State Health has signed a definitive agreement to acquire Holy Spirit Health System in Camp Hill, Pa., from Geisinger Health. 

Hershey, Pa.-based Penn State Health and Danville, Pa.-based Geisinger entered into the definitive agreement about eight months after signing a letter of intent.

Under the transaction, expected to be completed in October, Penn State Health will acquire Holy Spirit Hospital, its affiliated outpatient practices and urgent care centers, Ortenzio Heart Center, and West Shore EMS. After the transaction closes, Holy Spirit Hospital will be renamed Penn State Health Holy Spirit Medical Center.

“Holy Spirit’s hospital, employed medical group and strong community of independent practice physicians, working in collaboration with our Milton S. Hershey Medical Center, offers consumers a strong competitive alternative for healthcare services,” said Penn State Health CEO Steve Massini in a news release. “We’re pleased we could reach agreement with Geisinger to bring Holy Spirit into the Penn State Health family.”

The transaction requires regulatory approval by the Federal Trade Commission and the Pennsylvania attorney general. 

 

Coronavirus spike won’t end elective surgeries, Milwaukee hospital execs say

Posted on by • Posted in Cash, Cash Reserves, Coronavirus, Crisis, Crisis Management, Economic Crisis, Economic Recovery, Elective Procedures, Elective Surgery, Health System, Hospital, Hospital Industry, Infection Control, Infection Control Plan, Infectious Virus, Mortality, Pandemic, Personal Protective Equipment (PPE), Public Health, Public Safety, Quarantine, Social Distancing, Supply Chain • Leave a comment

https://www.beckershospitalreview.com/hospital-management-administration/coronavirus-spike-won-t-end-elective-surgeries-milwaukee-hospital-execs-say.html?utm_medium=email

Medical Technology News - COVID-19 Risk in Elective Surgery Reboot

Healthcare executives in the Milwaukee area say they plan to continue offering elective care even if COVID-19 hospitalizations spike, according to the Milwaukee Business Journal. 

Many public health experts expect a second wave of COVID-19 infections to hit by the end of the year. But the healthcare executives said that hospitals won’t need to implement strict elective care cancellation procedures as they did in March and April because more is known about the virus.

“We know COVID now,” Jeff Bahr, MD, chief Aurora Medical Group officer for Advocate Aurora Health, told the Business Journal. “I accept that there might be another peak. The name of the game right now is to be able to continue to serve patients and continue despite another bump or spike.”

Dr. Bahr added that Advocate Aurora Health executives plan to continue “with minimal interruption” to elective surgical procedures. 

Spokespeople for ProHealth Care, Froedtert Health, the Medical College of Wisconsin and Children’s Wisconsin also told the Business Journal that their organizations plan to continue some or all elective surgeries even if there is a second surge in COVID-19 cases.

Medical College of Wisconsin President and CEO John Raymond Sr., MD, told the Business Journal that “Even with a second wave or surge of COVID-19 cases, I do not believe that we will need to return to the stringent restrictions that were imposed on elective procedures and routine clinical care in March and April of this year.”

ProHealth Care and Children’s Hospital of Wisconsin officials said that they plan to offer elective care amid  a spike, but the amount of that care will depend on several factors, including whether there’s enough protective gear for staff. 

Health systems across the U.S. canceled elective procedures in mid-March in an effort to prepare for a spike in COVID-19 cases. As a result of the cancellations of the more lucrative services, health systems saw steep revenue drops. Throughout the last month, hospitals have started to resume elective services.