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Healthcare executives fear for their organizations’ viability without a COVID-19 vaccine
A complete financial recovery for many organizations is still far away, findings from Kaufman Hall indicate.
For the past three years, Kaufman Hall has released annual healthcare performance reports illustrating how hospitals and health systems are managing, both financially and operationally.
This year, however, with the pandemic altering the industry so broadly, the report took a different approach: to see how COVID-19 impacted hospitals and health systems across the country. The report’s findings deal with finances, patient volumes and recovery.
The report includes survey answers from respondents almost entirely (96%) from hospitals or health systems. Most of the respondents were in executive leadership (55%) or financial roles (39%). Survey responses were collected in August 2020.
FINANCIAL IMPACT
Findings from the report indicate that a complete financial recovery for many organizations is still far away. Almost three-quarters of the respondents said they were either moderately or extremely concerned about their organization’s financial viability in 2021 without an effective vaccine or treatment.
Looking back on the operating margins for the second quarter of the year, 33% of respondents saw their operating margins decline by more than 100% compared to the same time last year.
Revenue cycles have taken a hit from COVID-19, according to the report. Survey respondents said they are seeing increases in bad debt and uncompensated care (48%), higher percentages of uninsured or self-pay patients (44%), more Medicaid patients (41%) and lower percentages of commercially insured patients (38%).
Organizations also noted that increases in expenses, especially for personal protective equipment and labor, have impacted their finances. For 22% of respondents, their expenses increased by more than 50%.
IMPACT ON PATIENT VOLUMES
Although volumes did increase over the summer, most of the improvement occurred in areas where it is difficult to delay care, such as oncology and cardiology. For example, oncology was the only field where more than half of respondents (60%) saw their volumes recover to more than 90% of pre-pandemic levels.
More than 40% of respondents said that cardiology volumes are operating at more than 90% of pre-pandemic levels. Only 37% of respondents can say the same for orthopedics, neurology and radiology, and 22% for pediatrics.
Emergency department usage is also down as a result of the pandemic, according to the report. The respondents expect that this trend will persist beyond COVID-19 and that systems may need to reshape their business model to account for a drop in emergency department utilization.
Most respondents also said they expect to see overall volumes remain low through the summer of 2021, with some planning for suppressed volumes for the next three years.
RECOVERY MEASURES
Hospitals and health systems have taken a number of approaches to reduce costs and mitigate future revenue declines. The most common practices implemented are supply reprocessing, furloughs and salary reductions, according to the report.
Executives are considering other tactics such as restructuring physician contracts, making permanent labor reductions, changing employee health plan benefits and retirement plan contributions, or merging with another health system as additional cost reduction measures.
THE LARGER TREND
Kaufman Hall has been documenting the impact of COVID-19 hospitals since the beginning of the pandemic. In its July report, hospital operating margins were down 96% since the start of the year.
As a result of these losses, hospitals, health systems and advocacy groups continue to push Congress to deliver another round of relief measures.
Earlier this month, the House passed a $2.2 trillion stimulus bill called the HEROES Act, 2.0. The bill has yet to pass the Senate, and the chances of that happening are slim, with Republicans in favor of a much smaller, $500 billion package. Nothing is expected to happen prior to the presidential election.
The Department of Health and Human Services also recently announced the third phase of general distribution for the Provider Relief Fund. Applications are currently open and will close on Friday, November 6.
Jobless claims increase to 898,000, a sign the recovery could be stalling
The number of new unemployment claims jumped last week, the latest sign of the toll the coronavirus pandemic continues to take on the economy.
States across the country processed 898,000 new unemployment claims, up more than 50,000 from the previous week, the largest increase in first-time jobless applications since August.
These numbers marked another unfortunate milestone: The number of unemployment claims has been above the pre-pandemic one-week record of 695,000 for 30 weeks now.
Claims for Pandemic Unemployment Assistance, for gig and self-employed workers, went down, to 373,000 from about 460,000.
And the total number of people on all unemployment programs dropped slightly, to 25.3 million for the last week of September, down from 25.5 million the previous week.
The number of new claims has fallen greatly from its peak in the spring, but economists say they are concerned that the number remains so high.
“No question this report casts doubt on the recovery,” said Andrew Chamberlain, the chief economist at Glassdoor. “This is a sign covid is still dealing heavy blows to the labor market. We’re nowhere near having the virus under control.”
The news comes amid a string of poor economic news, with headlines punctuated with reports of large companies announcing layoffs in recent weeks.
These companies include Disney, insurance company Allstate, American and United Airlines, Aetna, and Chevron.
“It’s not coming down quickly,” said Julia Pollak, a labor economist at the jobs site ZipRecruiter. “It’s unclear how quickly we can recover. We’re likely to see additional layoffs and high numbers of unemployment for the foreseeable future.”
Pollak said there are indications that consumer spending has fallen since the expiration of government aid programs — another warning sign about more economic trouble ahead.
Many economists, including those at the Federal Reserve, have urged Congress and the White House to pass a new package of aid. House Democrats passed a $2.2 trillion plan earlier this month that Republicans have declined to advance, while Treasury Secretary Steven Mnuchin has been pushing a $1.8 trillion plan.
Still, there are signs that Senate Republicans would not be willing to accept that plan, either. Senate Majority Leader Mitch McConnell told reporters that he would not bring the plan to the floor, saying Senate Republicans believed the deal should top out at $1.5 trillion.
One sign of the severity of the economic crisis is the growing number of people who are transitioning to Pandemic Emergency unemployment compensation — for those who hit the maximum number of time that their state plans allow for. That number grew 818,000, according to the most recent figures, from the end of September.
Questions remain about the integrity of the data, as well.
A number of issues have complicated a straightforward read of the weekly release, such as issues with fraud, which are believed to have driven up these numbers an unknown amount, and backlogs in states like California. The country’s largest state typically accounts for about 20-28 percent of the country’s total weekly claims, but has put its claims processing on hold temporarily.
Instead, the Department of Labor is using a placeholder number for the state — 226,000, the number of new initial claims in the state from mid-September.
But some economists like Chamberlain are critical of this method.
“The idea of cutting and pasting the data from a state is so absurd,” he said. “They could at least use a model. But instead they’re carrying over the number. It’s quite a crisis.”
Quirks in the new filing process require people to apply for traditional unemployment and get rejected before applying for PUA — a source of potential duplicate claims.
Economists have been warning for months that the unemployment rate, which has improved steadily since its nadir in April, is at risk of getting worse without further government intervention.
States that saw significant jumps in unemployment claims last week include Indiana, Alaska, Arizona, Illinois, New Mexico and Washington.
Still, some economists have found reasons to hope. Pollak said job postings on ZipRecruiter have topped 10 million for the first time since the start of the pandemic, equaling a number last seen in January.
The jobs are different now, she said — fewer tech and business jobs and more warehousing jobs, temporary opportunities and contracting work.
8 hospitals laying off workers
The financial challenges caused by the COVID-19 pandemic have forced hundreds of hospitals across the nation to furlough, lay off or reduce pay for workers, and others have had to scale back services or close.
Lower patient volumes, canceled elective procedures and higher expenses tied to the pandemic have created a cash crunch for hospitals. U.S. hospitals are estimated to lose more than $323 billion this year, according to a report from the American Hospital Association. The total includes $120.5 billion in financial losses the AHA predicts hospitals will see from July to December.
Hospitals are taking a number of steps to offset financial damage. Executives, clinicians and other staff are taking pay cuts, capital projects are being put on hold, and some employees are losing their jobs. More than 260 hospitals and health systems furloughed workers this year and dozens others have implemented layoffs.
Below are eight hospitals and health systems that announced layoffs since Sept. 1, most of which were attributed to financial strain caused by the pandemic.
1. Citing a need to offset financial losses, Minneapolis-based M Health Fairview said it plans to downsize its hospital and clinic operations. As a result of the changes, 900 employees, about 3 percent of its 34,000-person workforce, will be laid off.
2. Lake Charles (La.) Memorial Health System laid off 205 workers, or about 8 percent of its workforce, as a result of damage sustained from Hurricane Laura. The health system laid off employees at Moss Memorial Health Clinic and the Archer Institute, two facilities in Lake Charles that sustained damage from the hurricane.
3. Burlington, Mass.-based Wellforce laid off 232 employees as a result of operating losses linked to the COVID-19 pandemic. The health system, comprised of Tufts Medical Center, Lowell General Hospital and MelroseWakefield Healthcare, experienced a drastic drop in patient volume earlier this year due to the suspension of outpatient visits and elective surgeries. In the nine months ended June 30, the health system reported a $32.2 million operating loss.
4. Baptist Health Floyd in New Albany, Ind., part of Louisville, Ky.-based Baptist Health, eliminated 36 positions. The hospital said the cuts, which primarily affected administrative and nonclinical roles, are due to restructuring that is “necessary to meet financial challenges compounded by COVID-19.”
5. Cincinnati-based UC Health laid off about 100 employees. The job cuts affected both clinical and non-clinical staff. A spokesperson for the health system said no physicians were laid off.
6. Mercy Iowa City (Iowa) announced in September that it will lay off 29 employees to address financial strain tied to the COVID-19 pandemic.
7. Springfield, Ill.-based Memorial Health System laid off 143 employees, or about 1.5 percent of the five-hospital system’s workforce. The health system cited financial pressures tied to the pandemic as the reason for the layoffs.
8. Watertown, N.Y.-based Samaritan Health announced Sept. 8 that it laid off 51 employees and will make other cost-cutting moves to offset financial stress tied to the COVID-19 pandemic.
America’s most prestigious medical journal makes a political statement
https://mailchi.mp/45f15de483b9/the-weekly-gist-october-9-2020?e=d1e747d2d8
For its first 208 years, the New England Journal of Medicine has never endorsed a political candidate. But this week the journal published an editorial outlining its political position in the upcoming Presidential election, signed unanimously by all editors who are US citizens.
The editors did not explicitly endorse former Vice President Biden, but rather offered a scathing condemnation of the current administration’s performance during the COVID pandemic: “Reasonable people will certainly disagree about the many political positions taken by candidates.
But truth is neither liberal nor conservative. When it comes to the response to the largest public health crisis of our time, our current political leaders have demonstrated that they are dangerously incompetent. We should not abet them and enable the deaths of thousands more Americans by allowing them to keep their jobs.” (Formally endorsing Biden last month, Scientific American also made the first political endorsement in its 175-year history.)
Much of the media coverage of the NEJM statement has centered on the question of whether medicine should involve itself in politics, or “live above it”.
Medicine has been drawn into political disputes before, but now the nature of the involvement has changed. In the past, debates largely centered around regulation, payment or policy—but now the science itself has become a fundamentally political issue.
The very nature of the coronavirus has become a matter of political belief, not just an indisputable scientific fact.
Public trust in both scientific institutions and the government, and their ability to work together, has been damaged. We fear this will lead to poorer health outcomes regardless of who wins the upcoming election.
States are telling some people to pay back unemployment benefits
Tens of millions of people have been on unemployment at some point in the last seven months, since the pandemic began. Now, thousands are being told they have to pay some or all of that money back, either because they made an error when they applied for benefits, or the state did.
“People are terrified by these messages, and they’re coming in swarms,” said Anne Paxton of the Unemployment Law Project. “We’re hearing about this all the time.”
Many people receiving overpayment notices have already used their benefits to pay for basic living expenses.
“I don’t have $10,000 sitting around,” said Larson Ross, 25, who got a notice of overpayment from the state of Colorado in late August. “I was a low-wage tea house worker who was unemployed for four months. I was using the money from unemployment for food and rent. So it’s spent.”
He has no idea what he’s going to do. He’s never been so stressed in his life.
“The few days after I first received the letter I found it really hard to get out of bed at all,” Ross said. “It’s really tough.”
There are a variety of reasons people might get an overpayment of benefits notice. In Ross’ case, his employer successfully contested his eligibility for unemployment, saying he quit, which he disputes. In some cases, it’s because an applicant misunderstood or mischaracterized something on their application. In other cases, the state may have miscalculated a benefit, or approved an application before verifying all the information.
While this also happened in pre-pandemic times, the issue is particularly acute now given the historic number of claims that have flooded state unemployment offices since March — and the state of the economy.
“The circumstances for returning to work are just not the same,” said Kathy White, deputy director of the Colorado Fiscal Institute. “Congress needs to recognize that, and make sure that the systems that they’re putting in place for workers to help them through this time, that are just immediate relief … they cannot be punitive. Coming out of COVID with a $15,000 debt that you cannot repay is not helpful.”
With traditional unemployment insurance benefits and with Federal Pandemic Unemployment Compensation, if someone has been overpaid, states have the discretion to waive repayment, as long as there was no fraud involved — particularly if repayment would cause financial hardship. But that is not the case with Pandemic Unemployment Assistance. Under current federal law, states do not have the authority to waive repayment of PUA benefits if a person was overpaid, according to Michele Evermore of the National Employment Law Project.
“This is honestly the biggest reason that Congress needs to do something on COVID relief,” she said. “If this issue doesn’t get solved, this is going to be more explosive than people losing the $600 in some ways, because they’ll have to pay back six months of Pandemic Unemployment Assistance. Nobody who qualified for PUA is going to have that much money sitting around.”
Andrew Tolch applied for PUA in the spring, on the advice of both his bank and his accountant, when he had to temporarily close down his toy store in St. Louis, Missouri because of COVID.
He was approved, and used all the money he got — less than $200 a week in PUA, plus the extra $600 a week in FPUC — to pay utilities and rent for the store.
Then, over the summer, he got an overpayment notice from the state of Missouri: he owed a big chunk of that money back — $2,376 in total.
“I was shocked, and I didn’t understand it,” he said. “I followed the rules correctly. We should have qualified, and according to the rules they gave us, we qualified.”
Tolch has since connected with a number of other small business owners in Missouri who also got notices of overpayment, and he said none of them understands why the state is now saying they didn’t qualify for pandemic assistance. They’re considering the possibility of a class action lawsuit.
“It will sink a lot of people if they would have to give it all back,” Tolch said. “Just one more blow from 2020 to small businesses.”
People who think they got an overpayment notice in error, or who can’t afford to repay the benefits, can always appeal — and should, according to Eric Salinger, director of the Employment Law Project at Alaska Legal Services.
But for people who do not win on appeal, or do not get a repayment waiver, states can find ways to recoup that money. Some are more aggressive than others, according to Evermore.
“Every state has different recoupment authority,” she said. “In some states, other benefits can be garnished to pay for that. Taxes could be garnished, future wages could be garnished.”
Larson Ross is afraid that will happen to him. He finally found a seasonal job in northern Colorado, and is making enough money to get by this month, at least — as long as the state doesn’t garnish his wages. Then, he doesn’t know.
Kathy White is hoping that Colorado and other states will use their discretion to waive repayment in cases where there was no fraud, and that Congress will change the law so states can waive overpayment recoupment of Pandemic Unemployment Assistance.
“It should be just forgiveness for error or overpayment in these unusual circumstances,” she said. “You don’t want to put people in a worse position because of the aid you’re trying to give them.”
Three Million People Lost Health Coverage From Their Employers During The Pandemic
More than three million American workers lost health insurance coverage this spring and summer from their employers as the pandemic and spread of Covid-19 triggered massive job losses, a new study shows.
In all, there were 3.3 million adults under the age of 65 who lost employer-sponsored health insurance and almost two-thirds of them, or 1.9 million, “became newly uninsured from late April through mid-July,” according to a new analysis by The Urban Institute and funded by the Robert Wood Johnson Foundation. The loss of employer coverage has hit Hispanic adults particularly hard with 1.6 million losing health benefits, Urban Institute researchers said.
And it could get worse.
“With continued weakness in the labor market, researchers conclude federal and state policymakers will need to act to prevent job losses from leading to further increases in uninsurance,” the authors of the report wrote about their analysis, which was derived from 2020 U.S. Census data.
In particular, the analysis underscores the need to expand health benefits, particularly Medicaid under the Affordable Care Act, analysts say. The ACA dangled billions of dollars in front of states to expand Medicaid coverage for poor Americans but 12 states generally led by Republican Governors or legislatures have refused while President Donald Trump and his appointees at the U.S. Justice Department fight led by Republican Governors
“The danger of an inadequate safety net can be seen in the non-expansion states, where the number of uninsured adults has already increased more than 1 million,” Robert Wood Johnson Foundation senior policy advisor Katherine Hempstead said in a statement accompanying the report.
U.S. Jobless Claims Fall, but Layoffs Continue: Live Updates
New claims for state unemployment insurance fell last week, but layoffs continue to come at an extraordinarily high level by historical standards.
Initial claims for state benefits totaled 790,000 before adjusting for seasonal factors, the Labor Department reported Thursday. The weekly tally, down from 866,000 the previous week, is roughly four times what it was before the coronavirus pandemic shut down many businesses in March.
On a seasonally adjusted basis, the total was 860,000, down from 893,000 the previous week.
“It’s not a pretty picture,” said Beth Ann Bovino, chief U.S. economist at S&P Global. “We’ve got a long way to go, and there’s still a risk of a double-dip recession.”
The situation has been compounded by the failure of Congress to agree on new federal aid to the jobless.
A $600 weekly supplement established in March that had kept many families afloat expired at the end of July. The makeshift replacement mandated by President Trump last month has encountered processing delays in some states and has funds for only a few weeks.
“The labor market continues to heal from the viral recession, but unemployment remains extremely elevated and will remain a problem for at least a couple of years,” said Gus Faucher, chief economist at PNC Financial Services. “Initial claims have been roughly flat since early August, suggesting that the pace of improvement in layoffs is slowing.”
New claims for Pandemic Unemployment Assistance, an emergency federal program for freelance workers, independent contractors and others not eligible for regular unemployment benefits, totaled 659,000, the Labor Department reported.
Federal data suggests that the program now has more beneficiaries than regular unemployment insurance. But there is evidence that both overcounting and fraud may have contributed to a jump in claims.
The Pandemic’s Most Treacherous Phase
The most dangerous phase of the COVID-19 crisis in the US may actually be now, not last spring. If the economy falters a second time, whether because of inadequate fiscal stimulus or flu season and a second COVID-19 wave, it will not receive the additional monetary and fiscal support that protected it in the spring.
April marked the most dramatic and, some would say, dangerous phase of the COVID-19 crisis in the United States. Deaths were spiking, bodies were piling up in refrigerated trucks outside hospitals in New York City, and ventilators and personal protective equipment were in desperately short supply. The economy was falling off the proverbial cliff, with unemployment soaring to 14.7%.
Since then, supplies of medical and protective equipment have improved. Doctors are figuring out when to put patients on ventilators and when to take them off. We have recognized the importance of protecting vulnerable populations, including the elderly. The infected are now younger on average, further reducing fatalities. With help from the Coronavirus Aid, Relief, and Economic Security (CARES) Act, economic activity has stabilized, albeit at lower levels.
Or so we are being told.
In fact, the more dangerous phase of the crisis in the US may actually be now, not last spring. While death rates among the infected are declining with improved treatment and a more favorable age profile, fatalities are still running at roughly a thousand per day. This matches levels at the beginning of April, reflecting the fact that the number of new infections is half again as high.
Mortality, in any case, is only one aspect of the virus’s toll. Many surviving COVID-19 patients continue to suffer chronic cardiovascular problems and impaired mental function. If 40,000 cases a day is the new normal, then the implications for morbidity – and for human health and economic welfare – are truly dire.
And, like it or not, there is every indication that many Americans, or at least their current leaders, are willing to accept 40,000 new cases and 1,000 deaths a day. They have grown inured to the numbers. They are impatient with lockdowns. They have politicized masks.
This is also a more perilous phase for the economy. In March and April, policymakers pulled out all the stops to staunch the economic bleeding. But there will be less policy support now if the economy again goes south. Although the Federal Reserve can always devise another asset-purchase program, it has already lowered interest rates to zero and hoovered up many of the relevant assets. This is why Fed officials have been pressing the Congress and the White House to act.
Unfortunately, Congress seems incapable of replicating the bipartisanship that enabled passage of the CARES Act at the end of March. The $600 weekly supplement to unemployment benefits has been allowed to expire. Divisive rhetoric from President Donald Trump and other Republican leaders about “Democrat-led” cities implies that help for state and local governments is not in the cards.
Consequently, if the economy falters a second time, whether because of inadequate fiscal stimulus or flu season and a second COVID-19 wave, it will not receive the additional monetary and fiscal support that protected it in the spring.
The silver bullet on which everyone is counting, of course, is a vaccine. This, in fact, is the gravest danger of all.
There is a high likelihood that a vaccine will be rolled out in late October, at Trump’s behest, whether or not Phase 3 clinical trials confirm its safety and effectiveness. This specter conjures memories of President Gerald Ford’s rushed swine flu vaccine, also prompted by a looming presidential election, which resulted in cases of Guillain-Barré syndrome and multiple deaths. This episode, together with a fraudulent scientific paper linking vaccination to autism, did much to help foster the modern anti-vax movement.5
The danger, then, is not merely side effects from a flawed vaccine, but also widespread public resistance even to a vaccine that passes its Phase 3 clinical trial and has the support of the scientific community. This is especially worrisome insofar as skepticism about the merits of vaccination tends to rise anyway in the aftermath of a pandemic that the public-health authorities, supposedly competent in such matters, failed to avert.
Studies have shown that living through a pandemic negatively affects confidence that vaccines are safe and disinclines the affected to vaccinate their children. This is specifically the case for individuals who are in their “impressionable years” (ages 18-25) at the time of exposure, because it is at this age that attitudes about public policy, including health policy, are durably formed. This heightened skepticism about vaccination, observed in a variety of times and places, persists for the balance of the individual’s lifetime.
The difference now is that Trump and his appointees, by making reckless and unreliable claims, risk aggravating the problem. Thus, if steps are not taken to reassure the public of the independence and integrity of the scientific process, we will be left only with the alternative of “herd immunity,” which, given COVID-19’s many known and suspected comorbidities, is no alternative at all.
All this serves as a warning that the most hazardous phase of the crisis in the US will most likely start next month. And that is before taking into account that October is also the beginning of flu season.
Cartoon – U.S. Border Patrol
HENRY KOTULA 