Sutter posts $857M loss in H1 on investment, operational declines

https://www.healthcaredive.com/news/sutter-posts-857m-loss-in-h1-on-investment-operational-declines/583910/?utm_source=Sailthru&utm_medium=email&utm_campaign=Issue:%202020-08-21%20Healthcare%20Dive%20%5Bissue:29231%5D&utm_term=Healthcare%20Dive

California's Sutter Health reaps rewards from investments in ...

Dive Brief:

  • Sutter Health had a staggering loss of $857 million in the first half of the year as the Northern California health was bruised by the pandemic. That’s almost a $1.4 billion drop in income compared to the first half of last year, a plummet Sutter management largely blamed on investment and operational losses in its latest financial filing posted Thursday.
  • The virus shuttered operations for a period of time, driving Sutter’s revenue down 8% to $6.1 billion during the first half of the year. Expenses climbed nearly 2%, contributing to an operating loss of $557 million.
  • Still, the nonprofit noted it did experience a significant rebound in its investments in the second quarter after weathering the devastating effects of the first quarter.

Dive Insight:

Sutter joins other major nonprofit health systems in posting net losses for the first half of the year despite receiving hundreds of millions in federal grants to help offset headwinds brought on by the pandemic.

Recently, both Renton, Washington-based Providence and Arizona-based Banner Health posted losses for the first half of the year — $538 million and $267 million, respectively. Dampened revenue and downturns in investments contributed to their losses.

The federal government has funneled billions of dollars to providers across the country in an attempt to help them weather the downturn in patient volumes. Sutter noted in its filing that it’s received $400 million in federal relief funds so far, though that wasn’t enough to push the health system back into the black. Sutter operates 29 hospitals and enjoys a large presence in Northern California.

Sutter reported fewer admissions and emergency room visits in the second quarter compared to the prior-year period, down about 10% and 19%, respectively.

The pandemic was quick to wreak havoc on Sutter’s finances during the first quarter, in which the system reported an operating loss of $236 million and a net loss of almost $1.1 billion.

The coronavirus is also serving as a drag on its ratings. In April, two of the three big ratings agencies downgraded Sutter Health’s rating.

In part, Moody’s attributed the downgrade to Sutter’s weaker profitability profile. In its rationale, Moody’s said, “Following a second year of weaker results, margins in 2020 are likely to remain under pressure due to COVID-19 related disruptions, ongoing performance challenges at some of Sutter’s facilities, and continued reimbursement pressure.”

Also weighing on Moody’s rating is the $575 million settlement expected to be paid this year to resolve antitrust issues. Last year, the health system averted a trial over antitrust concerns after agreeing to a settlement with California regulators. Sutter agreed it would end any contracts that require all of its facilities to be in-network or none of them and cap out-of-network charges, among other stipulations.

 

 

 

 

Revenues and volumes have fallen ‘off a cliff’ hospital executives tell American Hospital Association

https://www.healthcarefinancenews.com/news/aha-releases-case-studies-us-hospitals-and-health-systems-highlighting-financial-challenges

Revenues and volumes have fallen 'off a cliff' hospital executives ...

Eight health systems in AHA case study are asking Congress for more relief funding.

The American Hospital Association has released eight case studies from hospitals and health systems across the country that highlight how systems of different shapes and sizes are reacting to the financial challenges posed by COVID-19.

The case studies include Kindred Healthcare and TIRR Memorial Hermann in Houston; AdventHealth Central Florida Division in Orlando, Florida; the Loretto Hospital in Chicago; Kittitas Valley Healthcare in Ellensburg, Washington; Washington Regional Medical Center in Fayetteville, Arkansas; Banner Health in Phoenix; UR Medicine Thompson Health in Canandaigua, New York; and the Queen’s Health Systems and the Queen’s Medical Center in Honolulu.

Across the board, every case study revealed that hospitals and health systems are asking Congress for more relief funding.

“We are begging for more assistance and more help because we can’t keep moving forward,” said Michael Stapleton, the president and CEO of UR Medicine Thompson Health in New York.

WHAT’S THE IMPACT?

In Texas, the state with the third most COVID-19 cases, Kindred Healthcare and TIRR Memorial Hermann have begun to rely on inpatient rehabilitation facilities and long-term acute care hospitals to treat COVID-19-positive and medically complex recovering COVID-19 patients.

“In particular, as communities and hospitals struggled to meet ICU capacity needs, these hospitals stepped forward to take care of COVID-19-positive patients and others to help provide beds for more COVID-19-positive patients,” the case study said.

However, even with assistance from local facilities, post-acute care providers have incurred increased costs to prepare for and treat COVID-19-positive patients and complex post-COVID-19 patients.

“When you look at lost revenue and volumes, and the additional costs of ramping up to prepare for COVID-19, whether it’s personal protective equipment, respiratory systems, medications or facility infrastructure changes, there are significant dollars associated with that,” said Jerry Ashworth, the senior vice president and CEO at TIRR Memorial Hermann.

AdventHealth in Florida has taken financial hits from declining elective procedures and purchasing personal protective equipment. The company says it has lost $263 million since the start of the pandemic and has spent $254 million sourcing PPE.

“Florida is in the middle of the crisis,” said Todd Goodman, division chief financial officer of AdventHealth. “Our current COVID numbers are four times higher than the peak that we had back in April. We are bringing in higher-priced nurses and staff from other parts of the nation, because of a rapid increase in inpatient census. We are in a different place today than we were even six weeks ago.”

COVID-19 has disproportionately affected communities of color across the country, but especially in Chicago, where 30% of the population is Black. Forty-six percent of all COVID-19 cases and 57% of all deaths are Black people.

Despite having 70% of its admissions being related to COVID-19, the Loretto Hospital in Chicago has not received any funds from the Coronavirus Aid, Relief, and Economic Security Act hot spot distribution.

“Our COVID-19 unit is full and has been for the last three months; we’re now at 296 COVID-19 patients [on July 16] and yet we’ve not received any of the COVID-19 high impact ‘hot spot’ payments,” said George Miller, the president and CEO of the Loretto Hospital. “We got the Small Business Administration loan to help keep our team members employed.”

Kittitas Valley Healthcare in Washington was among the first in the country to feel the impact of COVID-19. The rural delivery system and its critical access hospital postponed elective surgeries and many other nonessential services in response.

“Our revenues and volumes fell off a cliff,” said Julie Petersen, the CEO of Kittitas Valley Healthcare. “Our orthopedics programs, our GI [gastrointestinal] programs and cataract surgeries evaporated.”

Now, the hospital is off its original 2020 net revenue projections by $8.4 million.

After seeing a 12% rise in COVID-19 cases over a two-week period in Fayetteville, Arkansas, the Washington Regional Medical Center had 96% of its 40 intensive care unit beds occupied, a 20-bed COVID-19 ICU was completely full, and 298 of the facility’s 315 adult beds were occupied.

Taking care of these patients put the health system in a financial crisis. Its net patient revenue declined by $14 million in April. It furloughed 350 of its 3,300 employees and reduced the hours of 360 full-time workers, according to Larry Shackelford, the president and CEO of Washington Regional Medical Center.

On July 12, Banner Health in Arizona had more than 1,500 inpatients who either tested COVID-positive or are suspected of having COVID-19, representing 45% of the COVID-19 inpatient hospitalizations in the state, according to Dr. Marjorie Bessel, the chief clinical officer at Banner Health.

Banner expects operating losses of $500 million for 2020, compared to its initial expectations, with expected revenue losses approaching $1 billion for the year, according to the case study.

By mid-March, New York had 15 times more COVID-19 cases than any other state, according to the case study. Like the rest of the state, UR Medicine Thompson Health shut down many of its services, resulting in “insurmountable” financial losses and staff furloughs.

“Our first projection was a $17 million loss through the year-end,” Stapleton said. “We lost half of March, all of April and half of May. The hospital has received only $3.1 million from the CARES Act tranche payments.”

Although the Queen’s Health Systems and the Queen’s Medical Center in Hawaii are starting to reschedule appointments, surgeries and procedures that had been delayed by COVID-19, patients aren’t coming back as anticipated.

Even with the pent-up demand for elective procedures, minimally invasive and even short-stay procedures are still down by about 18%. We are seeing our in-person clinic visits down by about 14%, and the emergency department (ED) is the one that surprised us the most – down by 38%,” said Jason Chang, president of the Queen’s Medical Center and chief operating officer of the Queen’s Health Systems and the Queen’s Medical Center.

The systems lost $127 million between March and May, according to Chang. He says the projected losses are about $60 million for 2021, but could reach $300 million if Hawaii experiences a second wave of COVID-19.

THE LARGER TREND

The AHA has cited $323 billion in losses industry-wide due to the ongoing COVID-19 pandemic, with U.S. hospitals anticipating about $120 billion in losses from July to December alone.

It was joined by the American Nurses Association and the American Medical Association to ask Congress to provide additional funding to the original $100 billion from the CARES Act. In a letter sent in July, the organizations asked for “at least an additional $100 billion to the emergency relief fund to provide direct funding to front line health care personnel and providers, including nurses, doctors, hospitals and health systems, to continue to respond to this pandemic.”

 

 

 

 

Recovery Through Resilience: Considerations of Top CFOs

Recovery Through Resilience: Considerations of Top CFOs

Recovery Through Resilience: Considerations of Top CFOs - CFO

As the pandemic continues to cause global economic disparity, experts scramble to forecast economic recovery. While no one can predict with precision what lies ahead for the economy, CFOs’ expectations and actions can be a helpful barometer. On a recent Resilient Podcast episode, Mike Kearney, Deloitte Risk & Financial Advisory CMO, and I discussed CFOs’ expectations for the economy, how they are handling hiring and retention, and how they can position their companies for growth. Here are the top takeaways.

1. CFOs Remain on the Defensive

CFOs’ economic expectations have plummeted. Our Q2 CFO Signals Survey marked the lowest readings on business expectation metrics since the first survey 41 quarters ago. Just 1% of CFOs rated conditions in North America as good, compared with 80% in the first quarter. A separate poll of 118 Fortune 500 CFOs conducted at the end of June echoed the sentiments of our Q2 Signals Survey and found that most respondents expect slow to moderate recovery. Over half expect they will not reach pre-crisis operating levels until 2021 and with 17% expecting 2022 or later.

Right now, a foremost priority for resilient CFOs is to ensure enough cash and liquidity for their company to operate. The focus on cost reduction outweighed revenue growth for the first time in the history of the Signals survey. As such, CFOs are doubling down on investing cash rather than returning it to shareholders, staying in existing geographies rather than moving to new ones, and focusing on organic growth as opposed to inorganic growth like mergers and acquisitions.

 2. Navigating New Frontiers

Rest assured that the news isn’t all bad. The Q2 Signals Survey did find that 585 of CFOs see the North American economy rebounding a year from now. Notably, when asked whether they felt their company was in response or recovery mode, or already in a position to thrive, only about a quarter of CFOs said they were still responding to the pandemic. In fact, 37% of CFOs believe their companies are already in “thrive” mode. In the meantime, CFOs are reimagining company configurations, diversifying supply chains, and accelerating automation.

One obvious example of how CFOs are taking a resilient approach to navigate uncertainties is the widespread adoption of virtual work.

According to the Q2 Signals Survey, while just under half say they will resume on-site work as soon as governments allow it, about 70% of CFOs say those who can continue to work remotely will have the option of doing so. This will likely become a critical component to retaining top talent—a longtime concern for CFOs—particularly in a challenging economy. Resilient CFOs will continue to shift underlying business processes to accommodate routine remote work, including investing in new technologies for an efficient and effective virtual workforce, moving platforms to the cloud, and even adjusting internal control mechanisms to allow for off-site collaboration, budgeting, and financial planning.

3. The Role the CFO Can Play

Over the past decade or so, CFOs have evolved to become business strategists, but never has their role as stewards been more important as they grapple with how to navigate a business landscape that changes by the hour. In the coming months, CFOs should consider focusing on:

  • Revisiting their financing and liquidity strategies, centralizing cash release decisions with the treasurer, and leveraging tax planning to reduce cash outlays and preserve budget. Deliver a balance sheet with headroom, flexibility, and liquidity to take advantage of once-in-a-lifetime market opportunities that could present themselves.
  • Exploring different recovery scenarios, keeping an eye on important risk metrics that may signal a time to innovate. Evolve business models, processes, and technologies to maximize current performance and position companies to be able to seize new opportunities.
  • Keeping top talent by embracing a company’s best people, whether it is offering work-from-home capabilities, or nurturing followership through trust. Organizations that can retain their top people may be best positioned in recovery.

During recovery, a critical benchmark to track will be CFOs’ risk appetite. In the Q2 Signals Survey, the proportion of CFOs saying it is a good time to be taking greater risk plummeted to 27%. An upward tick of this finding may signal a greater focus on revenue growth, a willingness to expand into new markets, and an appetite for deal-making. Until then, by taking a resilient approach in the coming months, CFOs can position their companies for strong performance, future growth, and market-moving success as the economy starts to recover.

 

 

 

The Sudden Departures of CFOs

https://www.kornferry.com/insights/articles/the-sudden-departures-of-cfos?utm_source=marketo&utm_medium=email&utm_campaign=2020-08-twil&mkt_tok=eyJpIjoiWlRFMk16bG1OamczTVRrdyIsInQiOiI5aitPUVlWMjlGbDlWTDhneWpcL0VCeEMyNzAzMjErNVd4SUtSNkRFaktCTkg0SEs3RHg5M0RteVhkd2FyZVAxWUpXZGhBNERwNldZRUd4Y2R3XC9tekcrOG1pRjBXWTcrbkZkMEg3SVN2Y0htV3dSY1A4NGhBWEM4T1wvanp0WWJ4aSJ9

The Sudden Departures of CFOs

Though critical to operations, chief financial officers are finding new roles or retiring at a blistering pace. What that means to firms.

Rewriting corporate budgets seemingly daily. Bargaining with banks over broken loan covenants. Answering constant calls from investors and board directors. And, in extreme cases, figuring out how to make payroll. All while working with no colleagues around. Is it any wonder now that so many chief financial officers have recently said, “It’s time to do something else”?

The number of CFOs—usually the second in command at a corporation—who are leaving their current job or looking for something new has surged over the summer. In just one week in early August, the high-profile CFOs at General Motors, Cisco Systems, and Avis Budget Group announced they were departing. According to one survey, 80 finance chiefs of S&P 500- or Fortune 500-listed firms left their positions through the start of August, compared with 84 at this point last year–a remarkable figure, experts say, because there was a period of about six weeks during the spring when there were almost no CFO changes.

It’s a trend that experts believe will likely continue as the pandemic continues to disrupt the finances of organizations in every industry everywhere. “This crisis will create a demand for radical, creative thinking that has often been lacking from finance leaders,” says Beau Lambert, a Korn Ferry senior client partner in the firm’s Financial Officers practice.

Experts attribute the surge in movement to a variety of reasons. Some CFOs, after helping their companies get through the period where lockdowns crippled revenues, have decided they’ve had enough. “They’re saying, ‘I have an amazing career—I’m taking the chips off the table and going home,’” Lambert says.

The lockdown period was a time when CFOs were working nonstop just to keep their organizations afloat, or if that was impossible, guide them into bankruptcy. Now these top finance leaders have had a chance to self-reflect, something they may have never done before because they’ve always been “knee-deep in the mess,” says Barry Toren, leader of Korn Ferry’s Financial Officers practice. The process has left some energized and looking for a new challenge at a different organization.

That recent career decision hasn’t always been in the CFO’s hands, however. Some company CEOs, recognizing that the financial road ahead is not going to look like it did before the pandemic, are looking for new financial talent they think is better suited to the task. “We see seasoned CFOs stepping down—of their own volition or otherwise—in order to allow a new, perhaps better-equipped, generation of finance leaders to navigate through the uncertain present and future,” says Katie Gleber, an associate in Korn Ferry’s Financial Officers practice.

Experts say the pandemic has accelerated some trends impacting CFOs that were already in place. Organizations were already looking for CFOs who could do more than just sit in the back office and handle the money. Modern-day CFOs need to be as well or more skilled in business partnering as they are in financial engineering, Lambert says. Today’s CFOs also need to have a much higher tolerance for ambiguity and the ability to inspire others.

One of the offshoots of the pandemic pushing millions to work remotely is that it has made it easier for CFOs to explore the job market. In the past, CFOs usually had to travel for a couple of days to their prospective employer to meet the senior leaders of the organization. Now, Toren says, those job-hunting CFOs can talk to CEOs and directors at two organizations in one day without leaving their house. 

 

 

 

 

Cash-Pinched Hospitals Press Congress to Break Virus Fund Logjam

https://news.bloomberglaw.com/health-law-and-business/cash-pinched-hospitals-press-congress-to-break-virus-fund-logjam

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Hospital groups are pressing Congress to put more money into a relief fund for hospitals and providers, even as labor data showed signs of a turnaround for the health-care industry last month.

Congressional leaders are at a standstill over the next coronavirus-relief package and it could be weeks until lawmakers vote on legislation. Hospital groups have said the $175 billion Congress already approved has been a crucial lifeline to keep hospitals from laying off more staff or potentially closing. Some are worried the money may start to run dry soon.

The coronavirus is prompting many Americans to delay health care, and further funding delays exacerbate the need for assistance, the hospitals warn. Some providers that shed jobs earlier in the pandemic have begun adding them back, but employment levels remain far below where they once were.

“The longer we are in the pandemic the more clear it becomes that this is not going to be a short-term issue,” Beth Feldpush, senior vice president of policy and advocacy at America’s Essential Hospitals, said.

Leaders of both parties back more federal funding to help hospitals and doctors’ offices stay in business. Democrats proposed $100 billion for the industry, as hospital groups such as AEH sought, in virus-relief legislation (H.R. 6800) the House passed earlier this year. Republicans included $25 billion in their counterproposal.

The Health and Human Services Department has promised about $115 billion of the $175 billion in relief Congress approved this year to help health-care providers offset their Covid-19-related losses, according to agency data. That leaves the industry with about $60 billion left.

The U.S. exceeded 5 million confirmed Covid-19 cases Aug. 9, according to data from Bloomberg News and Johns Hopkins University, more than any other country. Almost 165,000 people in the U.S. have died from the virus.

Industry Impact

The health-care industry added more than 126,000 jobs in July, according to data released last week by the Bureau of Labor Statistics. Dentist offices and hospitals, the section of the industry that was laying off tens of thousands of people in April and May, accounted for more than 70,000 of those new jobs.

Still, there were 797,000 fewer health-care jobs compared to before the pandemic, according to BLS.

The virus hit parts of the heath-care industry unevenly. Large health systems such as HCA Healthcare Inc. and Universal Health Services Inc. posted better-than-expected profits for the second quarter of 2020.

Some hospitals that didn’t have much cash-on-hand to start the year are struggling with lower profits and may need added relief if the virus continues to keep Americans from seeking care, industry watchers said.

“No hospital is going to come out of this year better than they were in prior years,” Suzie Desai, senior director for S&P Global Rating’s Not-for-Profit Health Care group, said.

The federal relief funds helped buoy hospitals this year, hospital groups argue. The American Hospital Association estimates that without relief funds, hospitals margins would have been down 15% and could be down 11% at the end of 2020 if the virus continues to spread at its current pace.

The AHA estimated losses for the nation’s hospitals and health systems will reach $323 billion this year.

 

 

Pandemic relief funds pivotal in keeping hospitals afloat during Q2

https://www.fiercehealthcare.com/hospitals/hospital-earnings-highlight-pivotal-role-federal-relief-funds-staying-afloat-during?mkt_tok=eyJpIjoiTURoaU9HTTRZMkV3TlRReSIsInQiOiJwcCtIb3VSd1ppXC9XT21XZCtoVUd4ekVqSytvK1wvNXgyQk9tMVwvYXcyNkFHXC9BRko2c1NQRHdXK1Z5UXVGbVpsTG5TYml5Z1FlTVJuZERqSEtEcFhrd0hpV1Y2Y0sxZFNBMXJDRkVnU1hmbHpQT0pXckwzRVZ4SUVWMGZsQlpzVkcifQ%3D%3D&mrkid=959610

Hospital system earnings for the second quarter of the year painted a stark picture of how federal relief funding helped offset massive losses in patient volume sparked by the COVID-19 pandemic.

But a full financial recovery may not happen until next year, some analysts warn.

Major hospital systems such as HCA Health and Universal Health Services posted profits in the second quarter despite plummeting volumes sparked by the cancellation of elective procedures and patients avoiding care due to fears of exposure to the virus. A key boost, however, came from a $175 billion fund passed by Congress and loans under the Medicare Accelerated and Advance Payments Program.

“These companies survived the June quarter and exited the quarter with substantial amounts of liquidity,” said Jonathan Kanarek, vice president and senior credit officer for Moody’s Investors Services. “We think [liquidity] is probably the most critical factor for them as far as weathering the storm.”

Congress has approved $175 billion to help prop up providers, of which the Department of Health and Human Services has distributed more than $100 billion.

The Centers for Medicare & Medicaid Services also gave out $100 billion in advance Medicare payments before suspending the program in late April. But the payments are loans that hospitals have to start repaying as soon as this month, as opposed to the congressional funding that does not have to get paid back.

Hospital system earnings illustrated how pivotal the relief funds were to combat massive holes in patient volumes.

Tenet Healthcare, which operates 65 hospitals across the country, reported Monday that it earned in the second quarter adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $732 million. But of that $732 million, more than 70% of it was aid from the relief fund.

Tenet wasn’t the only for-profit system where relief funding was a large part of their adjusted EBITDA.

Community Health Systems, which operates 95 facilities, reported an adjusted EBITDA of $454 million in the second quarter. But most of that figure was due to the $448 million that it got from the relief funds.

The provider funding made up a smaller portion of HCA Healthcare’s earnings. The system of 184 hospitals reported that the funding made up 31% of its adjusted EBITDA.

Hospital system volumes greatly declined in April as facilities were forced to cancel elective procedures and patients were scared of going to the hospital.

For example, Tenet’s hospital admissions in April were 33% of what it had in the same month in 2019. But volumes started to recover as shelter-in-place orders expired and some states got a better handle on the pandemic.

Tenet saw admissions grow in June to 90% of what they were in June 2019.

But it remains unclear what hospital finances will look like for the rest of the year. Major systems like Tenet and HCA have scrapped their 2020 financial outlook because of the pandemic.

“We don’t think the shape of this recovery or trajectory will be linear in nature,” Kanarek said. “We think there will be a lot of starts and stops.”

Those starts and stops will depend on the extent of the spread of the virus in an area.

Some states such as Florida, Texas and Arizona have seen massive spikes in the virus in recent weeks, which has put renewed strain on systems. Texas’ governor canceled elective procedures in eight counties back in June, some of which included major cities such as Houston and Dallas.

“I am a little skeptical that we are going to be back to normal before we ultimately have a vaccine,” Kanarek said.

It is also murky on whether hospitals will continue to get more financial help from Congress.

The House passed the HEROES Act more than a month ago that gives providers another $100 billion, but it has stalled in the Senate.

Congress and the White House have been in extensive talks for more than a week on a new relief package. Senate Majority Leader Mitch McConnell released a package last week that had $25 billion in relief funding and lawsuit liability protections for providers.

But even without the additional funding, for-profit hospitals have made some moves to prepare for more shutdowns such as accessing capital markets to add additional lawyers of bank liquidity, Kanarek said.

“We can only hope 2021 will look like a more normal year for hospitals, perhaps more like 2019, but there is still a lot of uncertainty out there,” he said.

 

 

 

 

Industry Voices—6 ways the pandemic will remake health systems

https://www.fiercehealthcare.com/hospitals/industry-voices-6-ways-pandemic-will-remake-health-systems?mkt_tok=eyJpIjoiTURoaU9HTTRZMkV3TlRReSIsInQiOiJwcCtIb3VSd1ppXC9XT21XZCtoVUd4ekVqSytvK1wvNXgyQk9tMVwvYXcyNkFHXC9BRko2c1NQRHdXK1Z5UXVGbVpsTG5TYml5Z1FlTVJuZERqSEtEcFhrd0hpV1Y2Y0sxZFNBMXJDRkVnU1hmbHpQT0pXckwzRVZ4SUVWMGZsQlpzVkcifQ%3D%3D&mrkid=959610

Industry Voices—6 ways the pandemic will remake health systems ...

Provider executives already know America’s hospitals and health systems are seeing rapidly deteriorating finances as a result of the coronavirus pandemic. They’re just not yet sure of the extent of the damage.

By the end of June, COVID-19 will have delivered an estimated $200 billion blow to these institutions with the bulk of losses stemming from cancelled elective and nonelective surgeries, according to the American Hospital Association

A recent Healthcare Financial Management Association (HFMA)/Guidehouse COVID-19 survey suggests these patient volumes will be slow to return, with half of provider executive respondents anticipating it will take through the end of the year or longer to return to pre-COVID levels. Moreover, one-in-three provider executives expect to close the year with revenues at 15 percent or more below pre-pandemic levels. One-in-five of them believe those decreases will soar to 30 percent or beyond. 

Available cash is also in short supply. A Guidehouse analysis of 350 hospitals nationwide found that cash on hand is projected to drop by 50 days on average by the end of the year — a 26% plunge — assuming that hospitals must repay accelerated and/or advanced Medicare payments.

While the government is providing much needed aid, just 11% of the COVID survey respondents expect emergency funding to cover their COVID-related costs.

The figures illustrate how the virus has hurled American medicine into unparalleled volatility. No one knows how long patients will continue to avoid getting elective care, or how state restrictions and climbing unemployment will affect their decision making once they have the option.

All of which leaves one thing for certain: Healthcare’s delivery, operations, and competitive dynamics are poised to undergo a fundamental and likely sustained transformation. 

Here are six changes coming sooner rather than later.

 

1. Payer-provider complexity on the rise; patients will struggle.

The pandemic has been a painful reminder that margins are driven by elective services. While insurers show strong earnings — with some offering rebates due to lower reimbursements — the same cannot be said for patients. As businesses struggle, insured patients will labor under higher deductibles, leaving them reluctant to embrace elective procedures. Such reluctance will be further exacerbated by the resurgence of case prevalence, government responses, reopening rollbacks, and inconsistencies in how the newly uninsured receive coverage.

Furthermore, the upholding of the hospital price transparency ruling will add additional scrutiny and significance for how services are priced and where providers are able to make positive margins. The end result: The payer-provider relationship is about to get even more complicated. 

 

2. Best-in-class technology will be a necessity, not a luxury. 

COVID has been a boon for telehealth and digital health usage and investments. Two-thirds of survey respondents anticipate using telehealth five times more than they did pre-pandemic. Yet, only one-third believe their organizations are fully equipped to handle the hike.

If healthcare is to meet the shift from in-person appointments to video, it will require rapid investment in things like speech recognition software, patient information pop-up screens, increased automation, and infrastructure to smooth workflows.

Historically, digital technology was viewed as a disruption that increased costs but didn’t always make life easier for providers. Now, caregiver technologies are focused on just that.

The new necessities of the digital world will require investments that are patient-centered and improve access and ease of use, all the while giving providers the platform to better engage, manage, and deliver quality care.

After all, the competition at the door already holds a distinct technological advantage.

 

3. The tech giants are coming.

Some of America’s biggest companies are indicating they believe they can offer more convenient, more affordable care than traditional payers and providers. 

Begin with Amazon, which has launched clinics for its Seattle employees, created the PillPack online pharmacy, and is entering the insurance market with Haven Healthcare, a partnership that includes Berkshire Hathaway and JPMorgan Chase. Walmart, which already operates pharmacies and retail clinics, is now opening Walmart Health Centers, and just recently announced it is getting into the Medicare Advantage business.

Meanwhile, Walgreens has announced it is partnering with VillageMD to provide primary care within its stores.

The intent of these organizations clear: Large employees see real business opportunities, which represents new competition to the traditional provider models.

It isn’t just the magnitude of these companies that poses a threat. They also have much more experience in providing integrated, digitally advanced services. 

 

4. Work locations changes mean construction cost reductions. 

If there’s one thing COVID has taught American industry – and healthcare in particular – it’s the importance of being nimble.

Many back-office corporate functions have moved to a virtual environment as a result of the pandemic, leaving executives wondering whether they need as much real estate. According to the survey, just one-in-five executives expect to return to the same onsite work arrangements they had before the pandemic. 

Not surprisingly, capital expenditures, including new and existing construction, leads the list of targets for cost reductions.

Such savings will be critical now that investment income can no longer be relied upon to sustain organizations — or even buy a little time. Though previous disruptions spawned only marginal change, the unprecedented nature of COVID will lead to some uncomfortable decisions, including the need for a quicker return on investments. 

 

5. Consolidation is coming.

Consolidation can be interpreted as a negative concept, particularly as healthcare is mostly delivered at a local level. But the pandemic has only magnified the differences between the “resilients” and the “non-resilients.” 

All will be focused on rebuilding patient volume, reducing expenses, and addressing new payment models within a tumultuous economy. Yet with near-term cash pressures and liquidity concerns varying by system, the winners and losers will quickly emerge. Those with at least a 6% to 8% operating margin to innovate with delivery and reimagine healthcare post-COVID will be the strongest. Those who face an eroding financial position and market share will struggle to stay independent..

 

6. Policy will get more thoughtful and data-driven.

The initial coronavirus outbreak and ensuing responses by both the private and public sectors created negative economic repercussions in an accelerated timeframe. A major component of that response was the mandated suspension of elective procedures.

While essential, the impact on states’ economies, people’s health, and the employment market have been severe. For example, many states are currently facing inverse financial pressures with the combination of reductions in tax revenue and the expansion of Medicaid due to increases in unemployment. What’s more, providers will be subject to the ongoing reckonings of outbreak volatility, underscoring the importance of agile policy that engages stakeholders at all levels.

As states have implemented reopening plans, public leaders agree that alternative responses must be developed. Policymakers are in search of more thoughtful, data-driven approaches, which will likely require coordination with health system leaders to develop flexible preparation plans that facilitate scalable responses. The coordination will be difficult, yet necessary to implement resource and operational responses that keeps healthcare open and functioning while managing various levels of COVID outbreaks, as well as future pandemics.

Healthcare has largely been insulated from previous economic disruptions, with capital spending more acutely affected than operations. But the COVID-19 pandemic will very likely be different. Through the pandemic, providers are facing a long-term decrease in commercial payment, coupled with a need to boost caregiver- and consumer-facing engagement, all during a significant economic downturn.

While situations may differ by market, it’s clear that the pre-pandemic status quo won’t work for most hospitals or health systems.

 

 

 

The Future of Hospitals in Post-COVID America (Part 1): The Market Response

Click to access CBC_72_08052020_Final.pdf

 

[Readers’ Note: This is the first of two articles on the Future of Hospitals in Post-COVID America. This article
examines how market forces are consolidating, rationalizing and redistributing acute care assets within the
broader industry movement to value-based care delivery. The second article, which will publish next month,
examines gaps in care delivery and the related public policy challenges of providing appropriate, accessible
and affordable healthcare services in medically-underserved communities.]

In her insightful 2016 book, The Gray Rhino: How to Recognize and Act on the Obvious Dangers We Ignore,
Michelle Wucker coins the term “Gray Rhinos” and contrasts them with “Black Swans.” That distinction is
highly relevant to the future of American hospitals.

Black Swans are high impact events that are highly improbable and difficult to predict. By contrast, Gray
Rhinos are foreseeable, high-impact events that we choose to ignore because they’re complex, inconvenient
and/or fortified by perverse incentives that encourage the status quo. Climate change is a powerful example
of a charging Gray Rhino.

In U.S. healthcare, we are now seeing what happens when a Gray Rhino and a Black Swan collide.
Arguably, the nation’s public health defenses should anticipate global pandemics and apply resources
systematically to limit disease spread. This did not happen with the coronavirus pandemic.

Instead, COVID-19 hit the public healthcare infrastructure suddenly and hard. This forced hospitals and health systems to dramatically reduce elective surgeries, lay off thousands and significantly change care delivery with the adoption of new practices and services like telemedicine.

In comparison, many see the current American hospital business model as a Gray Rhino that has been charging toward
unsustainability for years with ever-building momentum.

Even with massive and increasing revenue flows, hospitals have long struggled with razor-thin margins, stagnant payment rates and costly technology adoptions. Changing utilization patterns, new and disruptive competitors, pro-market regulatory rules and consumerism make their traditional business models increasingly vulnerable and, perhaps, unsustainable.

Despite this intensifying pressure, many hospitals and health systems maintain business-as-usual practices because transformation is so difficult and costly. COVID-19 has made the imperative of change harder to ignore or delay addressing.

For a decade, the transition to value-based care has dominated debate within U.S. healthcare and absorbed massive strategic,
operational and financial resources with little progress toward improved care outcomes, lower costs and better customer service. The hospital-based delivery system remains largely oriented around Fee-for-Service reimbursement.

Hospitals’ collective response to COVID-19, driven by practical necessity and financial survival, may accelerate the shift to value-based care delivery. Time will tell.

This series explores the repositioning of hospitals during the next five years as the industry rationalizes an excess supply of acute care capacity and adapts to greater societal demands for more appropriate, accessible and affordable healthcare services.

It starts by exploring the role of the marketplace in driving hospital consolidation and the compelling need to transition to value-based care delivery and payment models.

COVID’s DUAL SHOCKS TO PATIENT VOLUME

Many American hospitals faced severe financial and operational challenges before COVID-19. The sector has struggled to manage ballooning costs, declining margins and waves of policy changes. A record 18 rural hospitals closed in 2019. Overall, hospitals saw a 21% decline in operating margins in 2018-2019.

COVID intensified those challenges by administering two shocks to the system that decreased the volume of hospital-based activities and decimated operating margins.

The first shock was immediate. To prepare for potential surges in COVID care, hospitals emptied beds and cancelled most clinic visits, outpatient treatments and elective surgeries. Simultaneously, they incurred heavy costs for COVID-related equipment (e.g. ventilators,PPE) and staffing. Overall, the sector experienced over $200 billion in financial losses between March and June 20204.

The second, extended shock has been a decrease in needed but not necessary care. Initially, many patients delayed seeking necessary care because of perceived infection risk. For example, Emergency Department visits declined 42% during the early phase of the pandemic.

Increasingly, patients are also delaying care because of affordability concerns and/or the loss of health insurance. Already, 5.4 million people have lost their employer-sponsored health insurance. This will reduce incremental revenues associated with higher-paying commercial insurance claims across the industry. Additionally, avoided care reduces patient volumes and hospital revenues today even as it increases the risk and cost of future acute illness.

The infusion of emergency funding through the CARES Act helped offset some operating losses but it’s unclear when and even whether utilization patterns and revenues will return to normal pre-COVID levels. Shifts in consumer behavior, reductions in insurance coverage, and the emergence of new competitors ranging from Walmart to enhanced primary care providers will likely challenge the sector for years to come.

The disruption of COVID-19 will serve as a forcing function, driving meaningful changes to traditional hospital business models and the competitive landscape. Frankly, this is long past due. Since 1965, Fee-for-Service (FFS) payment has dominated U.S. healthcare and created pervasive economic incentives that can serve to discourage provider responsiveness in transitioning to value-based care delivery, even when aligned to market demand.

Telemedicine typifies this phenomenon. Before COVID, CMS and most health insurers paid very low rates for virtual care visits or did not cover them at all. This discouraged adoption of an efficient, high-value care modality until COVID.

Unable to conduct in-person clinical visits, providers embraced virtual care visits and accelerated its mass adoption. CMS and
commercial health insurers did their part by paying for virtual care visits at rates equivalent to in-person clinic visits. Accelerated innovation in care delivery resulted.

 

THE COMPLICATED TRANSITION TO VALUE

Broadly speaking, health systems and physician groups that rely almost exclusively on activity-based payment revenues have struggled the most during this pandemic. Vertically integrated providers that offer health insurance and those receiving capitated payments in risk-based contracts have better withstood volume losses.

Modern Healthcare notes that while provider data is not yet available, organizations such as Virginia Care Partners, an integrated network and commercial ACO; Optum Health (with two-thirds of its revenue risk-based); and MediSys Health Network, a New Yorkbased NFP system with 148,000 capitated and 15,000 shared risk patients, are among those navigating the turbulence successfully. As the article observes,

providers paid for value have had an easier time weathering the storm…. helped by a steady source of
income amid the chaos. Investments they made previously in care management, technology and social
determinants programs equipped them to pivot to new ways of providing care.

They were able to flip the switch on telehealth, use data and analytics to pinpoint patients at risk for
COVID-19 infection, and deploy care managers to meet the medical and nonclinical needs of patients even
when access to an office visit was limited.

Supporting this post-COVID push for value-based care delivery, six former leaders from CMS wrote to Congress in
June 2020 calling for providers, commercial insurers and states to expand their use of value-based payment models to
encourage stability and flexibility in care delivery.

If value-based payment models are the answer, however, adoption to date has been slow, limited and difficult. Ten
years after the Affordable Care Act, Fee-for-Service payment still dominates the payer landscape. The percentage of
overall provider revenue in risk-based capitated contracts has not exceeded 20%

Despite improvements in care quality and reductions in utilization rates, cost savings have been modest or negligible.
Accountable Care Organizations have only managed at best to save a “few percent of Medicare spending, [but] the
amount varies by program design.”

While most health systems accept some forms of risk-based payments, only 5% of providers expect to have a majority
(over 80%) of their patients in risk-based arrangements within 5 years.

The shift to value is challenging for numerous reasons. Commercial payers often have limited appetite or capacity for
risk-based contracting with providers. Concurrently, providers often have difficulty accessing the claims data they need
from payers to manage the care for targeted populations.

The current allocation of cost-savings between buyers (including government, employers and consumers), payers
(health insurance companies) and providers discourages the shift to value-based care delivery. Providers would
advance value-based models if they could capture a larger percentage of the savings generated from more effective
care management and delivery. Those financial benefits today flow disproportionately to buyers and payers.

This disconnection of payment from value creation slows industry transformation. Ultimately, U.S. healthcare will not
change the way it delivers care until it changes the way it pays for care. Fortunately, payment models are evolving to
incentivize value-based care delivery.

As payment reform unfolds, however, operational challenges pose significant challenges to hospitals and health
systems. They must adopt value-oriented new business models even as they continue to receive FFS payments. New
and old models of care delivery clash.

COVID makes this transition even more formidable as many health systems now lack the operating stamina and
balance sheet strength to make the financial, operational and cultural investments necessary to deliver better
outcomes, lower costs and enhanced customer service.

 

MARKET-DRIVEN CONSOLIDATION AND TRANSFORMATION

Full-risk payment models, such as bundled payments for episodic care and capitation for population health, are the
catalyst to value-based care delivery. Transition to value-based care occurs more easily in competitive markets with
many attributable lives, numerous provider options and the right mix of willing payers.

As increasing numbers of hospitals struggle financially, the larger and more profitable health systems are expanding
their networks, capabilities and service lines through acquisitions. This will increase their leverage with commercial
payers and give them more time to adapt to risk-based contracting and value-based care delivery.

COVID also will accelerate acquisition of physician practices. According to an April 2020 MGMA report, 97% of
physician practices have experienced a 55% decrease in revenue, forcing furloughs and layoffs15. It’s estimated the
sector could collectively lose as much as $15.1 billion in income by the end of September 2020.

Struggling health systems and physician groups that read the writing on the wall will pro-actively seek capital or
strategic partners that offer greater scale and operating stability. Aggregators can be selective in their acquisitions,
seeking providers that fuel growth, expand contiguous market positions and don’t dilute balance sheets.

Adding to the sector’s operating pressure, private equity, venture investors and payers are pouring record levels of
funding into asset-light and virtual delivery companies that are eager to take on risk, lower prices by routing procedures
and capture volume from traditional providers. With the right incentives, market-driven reforms will reallocate resources
to efficient companies that generate compelling value.

As this disruption continues to unfold, rural and marginal urban communities that lack robust market forces will
experience more facility and practice closures. Without government support to mitigate this trend, access and care gaps
that already riddle American healthcare will unfortunately increase.

 

WINNING AT VALUE

The average hospital generates around $11,000 per patient discharge. With ancillary services that can often add up to
more than $15,000 per average discharge. Success in a value-based system is predicated on reducing those
discharges and associated costs by managing acute care utilization more effectively for distinct populations (i.e.
attributed lives).

This changes the orientation of healthcare delivery toward appropriate and lower cost settings. It also places greater
emphasis on preventive, chronic and outpatient care as well as better patient engagement and care coordination.
Such a realignment of care delivery requires the following:

 A tight primary care network (either owned or affiliated) to feed referrals and reduce overall costs through
better preventive care.

 A gatekeeper or navigator function (increasingly technology-based) to manage / direct patients to the most
appropriate care settings and improve coordination, adherence and engagement.

 A carefully designed post-acute care network (including nursing homes, rehab centers, home care
services and behavioral health services, either owned or sufficiently controlled) to manage the 70% of
total episode-of-care costs that can occur outside the hospital setting.

 An IT infrastructure that can facilitate care coordination across all providers and settings.

Quality data and digital tools that enhance care, performance, payment and engagement.

Experience with managing risk-based contracts.

 A flexible approach to care delivery that includes digital and telemedicine platforms as well as nontraditional sites of care.

Aligned or incentivized physicians.

Payer partners willing to share data and offload risk through upside and downside risk contracts.

Engaged consumers who act on their preferences and best interests.

 

While none of these strategies is new or controversial, assembling them into cohesive and scalable business models is
something few health systems have accomplished. It requires appropriate market conditions, deep financial resources,
sophisticated business acumen, operational agility, broad stakeholder alignment, compelling vision, and robust
branding.

Providers that fail to embrace value-based care for their “attributed lives” risk losing market relevance. In their relentless pursuit of increasing treatment volumes and associated revenues, they will lose market share to organizations that
deliver consistent and high-value care outcomes.

CONCLUSION: THE CHARGING GRAY RHINO

America needs its hospitals to operate optimally in normal times, flex to manage surge capacity, sustain themselves
when demand falls, create adequate access and enhance overall quality while lowering total costs. That is a tall order
requiring realignment, evolution, and a balance between market and policy reform measures.

The status quo likely wasn’t sustainable before COVID. The nation has invested heavily for many decades in acute and
specialty care services while underinvesting, on a relative basis, in primary and chronic care services. It has excess
capacity in some markets, and insufficient access in others.

COVID has exposed deep flaws in the activity-based payment as well as the nation’s underinvestment in public health.
Disadvantaged communities have suffered disproportionately. Meanwhile, the costs for delivering healthcare services
consume an ever-larger share of national GDP.

Transformational change is hard for incumbent organizations. Every industry, from computer and auto manufacturing to
retailing and airline transportation, confronts gray rhino challenges. Many companies fail to adapt despite clear signals
that long-term viability is under threat. Often, new, nimble competitors emerge and thrive because they avoid the
inherent contradictions and service gaps embedded within legacy business models.

The healthcare industry has been actively engaged in value-driven care transformation for over ten years with little to
show for the reform effort. It is becoming clear that many hospitals and health systems lack the capacity to operate
profitably in competitive, risk-based market environments.

This dismal reality is driving hospital market valuations and closures. In contrast, customers and capital are flowing to
new, alternative care providers, such as OneMedical, Oak Street Health and Village MD. Each of these upstart
companies now have valuations in the $ billions. The market rewards innovation that delivers value.

Unfortunately, pure market-driven reforms often neglect a significant and growing portion of America’s people. This gap has been more apparent as COVID exacts a disproportionate toll on communities challenged by higher population
density, higher unemployment, and fewer medical care options (including inferior primary and preventive care infrastructure).

Absent fundamental change in our hospitals and health systems, and investment in more efficient care delivery and
payment models, the nation’s post-COVID healthcare infrastructure is likely to deteriorate in many American
communities, making them more vulnerable to chronic disease, pandemics and the vicissitudes of life.

Article 2 in our “Future of Hospitals” series will explore the public policy challenges of providing appropriate, affordable and accessible healthcare to all American communities.

 

 

 

US weekly jobless claims hit 1.4 million, post second straight weekly increase

https://www.businessinsider.com/us-jobless-claims-unemployment-insurance-labor-market-filings-recession-coronavirus-2020-7

  • US jobless claims for the week that ended Saturday totaled 1.43 million, the Labor Department said Thursday. That came in slightly below the consensus economist estimate of 1.45 million.
  • It marked a second consecutive weekly increase after the prior week’s report ended a 15-week streak of declines. This week’s report brought total filings over a 19-week period to more than 54 million.
  • Continuing claims, the aggregate total of people receiving unemployment benefits, totaled 17 million for the week that ended July 18.

More than a million Americans filed for unemployment benefits last week, reflecting the continued high level of pandemic-induced layoffs as the US rolls back its economic-reopening efforts.

New US weekly jobless claims totaled 1.43 million in the week that ended Saturday, the Labor Department reported Thursday. That was slightly below the consensus economist estimate of 1.45 million compiled by Bloomberg. It also was a minor increase over the prior week’s 1.3 million filings, a reading that marked the first gain in 15 weeks.

In just a few months, the more than 54 million unemployment claims filed during the coronavirus pandemic have far surpassed the 37 million during the 18-month Great Recession. The latest figure is more than double the 665,000 filed during the Great Recession’s worst week.

“A combination of uncertainty from rising virus cases to the withdrawal of financial support is concerning for an already fragile recovery,” said Daniel Zhao, senior economist at Glassdoor. “The economy is still in deep risk of falling sideways – where conditions improve so sluggishly that the effects of the crisis become increasingly permanent.”

Continuing claims, which represent the aggregate total of people receiving unemployment benefits, came in at 17 million for the week that ended July 18, a decline from the prior period’s revised number.

Stubbornly high weekly claims for unemployment insurance add to growing concerns that the economic recovery from the pandemic-induced recession is stagnating as coronavirus cases increase. A number of states have had to pause or roll back their reopening plans to deal with COVID-19 spikes, harming the economic recovery.

Going forward, industry watchers will be waiting to see what the July jobs report shows. The report, due August 7, reflects a reference period that includes last week, when initial jobless claims ticked up for the first time in 15 weeks. That could foreshadow a negative headline jobs number in July, although the nonfarm payroll report has become increasingly difficult to predict.

Last week, the additional $600 unemployment benefit from the CARES Act expired, meaning that soon millions of Americans will see a significant decrease in weekly income. The GOP this week introduced its proposal, the HEALS Act, that would cut the weekly benefit to $200 until states could implement a program that’d replace 70% of wages for most filers.

In the week ending July 25, there were 829,697 initial claims from 50 states reporting for Pandemic Unemployment Assistance, the program that extended benefits to gig workers and independent contracts. The total applications for all state programs for the week ending July 11 was 30.2 million. 

 

 

 

 

Some providers face daunting repayment deadline for Medicare advance loans

https://www.fiercehealthcare.com/hospitals/some-providers-face-daunting-aug-1-repayment-deadline-for-medicare-advance-loans?mkt_tok=eyJpIjoiWkRReFlqRmpaamRtWVdabSIsInQiOiJFTEp3SjQ3NG01NXcwRTg3Z0hCZkdTRlwvOURSeEVlblwvRlFUWlZcL09ONjZGNVEybzl3ekl3VFd2ZEgxSjY2NGQ0TkFIRFdtQ0ZDWUx0ak96NU15d09qMWcrdm9BMFUxOSszcVI0T21rak5raEN0aE5Kb0VUUGFcL254QnBjMjdCbzkifQ%3D%3D&mrkid=959610

Starting this month, some providers are facing the prospect of their Medicare payments garnished to repay COVID-19 loans.

The pressing Aug. 1 deadline has sparked concerns from some experts and hospital groups that worry providers couldn’t afford to lose out on Medicare revenue as they combat revenue losses caused by the pandemic. While the program was intended to be a short-term solution, COVID-19 surges are proving that is not the case for some hospitals.

At the onset of the pandemic in March, the Centers for Medicare & Medicaid Services (CMS) extended the advance payment program, which has been used previously to help providers beset by disasters such as hurricanes. Providers and suppliers could apply for advance Medicare payments to offset massive losses sparked by declines in patient volumes due to COVID-19.

Most providers could get up to 100% of their Medicare payments for a three-month period, and inpatient acute care hospitals, children’s hospitals and some cancer hospitals can request up to 100% for a six-month period. Critical access hospitals could have gotten up to 125% over six months.

CMS had given out $100 billion of loans before suspending the program.

“It was very effective because the process was already in place,” said Denise Burke, a partner with the healthcare compliance and operations group for law firm Waller Lansden Dortch & Davis.

The goal behind the program is to help providers stay afloat and was meant to be a short-term solution, as repayment starts 120 days after a provider gets the first payment. But that is the problem, experts say.

“It was intended as a short-term bridge so they could get through the summer before everything returned to normal, only problem is nothing has returned to normal,” said Dan Mendelson, founder and former president of consulting firm Avalere Health.

Now, repayment for the first loans are due on Aug. 1 as more and more states are seeing massive surges of COVID-19. Some major hospital systems, such as HCA and CHS, have been able to offset massive declines in revenue thanks to the loans and money from a $175 billion provider relief fund passed by Congress.

Hospitals have one year from the date of the accelerated payment to repay the balance of the loan, but Medicare Part A providers and Part B suppliers have 210 days from the accelerated payment to repay.

“CMS should think about relative to financial position of the provider,” Mendelson said. “Some providers are doing just fine and can repay loans just like everybody else.”

After the 120-day period is up, CMS will take 100% of Medicare claims payments that would have gone to the provider to offset the balance of the loan.

But it remains unclear whether CMS can change the terms of the repayment to give providers and suppliers more time, especially if they are struggling.

“CMS moves deadlines all the time,” Mendelson said. “The question is whether they can or are willing to exercise this discretion in this case.”

It also is unlikely that CMS will resume the program, which some provider groups have also called for.

“It seems unlikely CMS will continue to allocate money through the advance payment program that has fewer terms and conditions than allocating through provider relief fund,” Burke said, referring to the $175 billion fund that Health and Human Services is still allocating.

CMS did not return a request for comment as of press time.

A major problem for some hospitals is they may not have the liquidity available to repay the loans.

“There are a lot of hospitals struggling right now because volumes are off,” Mendelson said. “This comes down to the fact that people are staying away from the hospital to the extent they possibly can.”

Provider groups such as the American Hospital Association are imploring Congress to forgive the loans, or at the very least change the repayment terms.

For instance, some groups want to lower the interest rates to 50 or 25% of a Medicare payment as opposed to 100%.

But talks on a new COVID-19 relief package have stalled so far no deal has emerged.

Senate Republicans released their own package earlier this week that includes another $25 billion for providers and gives liability protections for hospitals and other businesses. But the package doesn’t include changes to the loans.