Category Archives: Medicare Advance Payments

Hospitals to face bumpy recovery with depressed margins into 2021, S&P predicts

Posted on by • Posted in Coronavirus, Credit Quality, Credit Ratings, Crisis, Crisis Management, Economic Crisis, Economic Stimulus, Elective Procedures, Elective Surgery, Financially Distressed, Health System, Home Health, Hospital, Hospital Industry, Laboratory Industry, Market Outlook, Market Uncertainty, Medicare Advance Payments, Operating Expenses, Operating Income, Operating Margin, Operating Performance, Operating Revenue, Paycheck Protection Program, The CARES Act • Leave a comment

https://www.healthcaredive.com/news/SP-ratings-hospital-margins-historic-lows-until-2021/578815/

April was the worst month ever for hospital operating margins

Dive Brief:

  • Despite rebounding patient volumes at some health systems, an overall slow and bumpy recovery period is most likely to last into next year, according to analysts with S&P Global Ratings. Operating margins will remain below historic levels for the rest of 2020 and into early 2021.
  • The ratings agency took negative action against companies in health sub-sectors facing more sudden and dramatic declines in business and now face less certain paths to recovery than others, such as dental companies, along with physical therapy and ambulatory surgery centers.
  • Medical staffing and physician groups were also downgraded or had their outlooks revised, due to major declines in emergency room and doctors office visits​ coupled with declining demand for anesthesia and radiology services related to delayed surgeries.

Dive Insight:

Federal relief grants are helping offset major financial losses for some health systems in the short-term, but factors like a second surge causing another total lockdown, rising unemployment and hesitancy from patients as they return to medical settings make long-term prospects unpredictable.

S&P Global Ratings said in a report this week that it took 36 negative actions in health services companies during the pandemic. The most affected sub-sector was dental companies. It also changed outlooks on ambulatory surgery centers given significant volume declines.

Hospitals and home healthcare were rated at moderate to high financial risk, though analysts expect those businesses to recover faster due to the more essential nature of their services, according to the report. And in the short-term, government relief funds will help bolster hospitals’ liquidity as they attempt to return to normal operations and recover from steep losses.

Delayed elective care that’s just restarting in some states led most hospitals to the financial fallout. But even hospitals treating a large number of COVID-19 patients will be hurt, as these patients are expensive to treat due to higher supply and labor costs, the report said.

It also found that nonprofit and for-profit operators could fare differently in their financial recoveries. Non-profit hospitals generally have larger cash reserves than for profit systems, which rely instead almost exclusively on cash flow and borrowings for liquidity.

Providers are relying specifically on the Coronavirus Aid, Relief and Economic Security Act which allocated $100 billion for providers that they don’t have to pay back, though there has been some criticism about how the money was distributed and whether it advantages some providers over others.

A Kaiser Family Foundation report found that CARES funding tends to favor for profit, higher margin hospitals with a higher mix of private payer revenue compared to those that rely on government payers such as Medicare and Medicaid.

Other legislation to help financially struggling health systems include advanced Medicare payments in the form of loans that must be paid back roughly four months after they are received.

The Paycheck Protection and Healthcare Enhancement Act passed in late April gave providers an additional $75 billion, though calculation and distribution methods have yet to be determined.

The U.S. House of Representatives also passed a $3 trillion bill dubbed the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act that allocates $100 billion for provider reimbursement and creates special enrollment periods for Medicare and Affordable Care Act plans, though the Trump administration said it’s too soon for additional relief funding.

Lab companies were put in the moderate risk category, and seeing a “40% decline in lab tests net of COVID testing,” S&P said.

Still, it said despite the drop in overall testing for LabCorp and Quest Diagnostics, S&P predicted “their services to become even more important, and for their services to recover reasonably well as testing related to the pandemic continues to grow and as medical procedures and physician visits ramp-up through the rest of the year and into 2021.”

 

 

 

Ascension reports loss of $2.7B in Q1

Posted on by • Posted in Cash, Cash Reserves, Coronavirus, Crisis, Crisis Management, Economic Crisis, Economic Stimulus, Health System, Hospital, Hospital Industry, Medicare Advance Payments, Net Income, Nonoperating Income, Operating Expenses, Operating Income, Operating Margin, Operating Performance, Operating Revenue, Pandemic, Supply Chain, The CARES Act • Leave a comment

https://www.healthcaredive.com/news/ascension-reports-loss-of-27b-in-q1-COVID/578579/

Dive Brief:

  • Ascension reported a total loss of $2.7 billion in the first three months of 2020, compared to income of $1.2 billion during the same time last year, according to new ​financial statements from the nonprofit giant.
  • The Catholic system, one of the largest hospital operators in the country, saw operating revenue decrease 2.5% year over year in the period ending March 31 to $6.1 billion. That came as expenses like salaries and supplies ticked up by more than 3% to $6.4 billion.
  • Ascension also reported losses from investments of $2.48 billion, compared to return from investments of $1.1 billion from the same time last year. Nonprofit operators are reporting massive investment hits as the stock market slid in the beginning of the year following widespread business closures and shelter-in-place orders stifling the economy.

Dive Insight:

Nonprofit hospitals are posting huge losses for the outset of 2020 as analysts predict an even grimmer second quarter to come. However, though losses in the first three months of the year dragged St. Louis-based Ascension into the red, the provider behemoth is still in a relatively good position to weather the pandemic, with current assets of $38.3 billion and 231 days of cash on hand.

Though patient volume was up prior to the pandemic, revenue from providing medical care flagged in the three-month period, as inpatient and ambulatory care slowed as the coronavirus surfaced in the U.S. In mid-March, Ascension deferred all non-essential procedures as stay-at-home orders kept potential patients in the home, impacting the system’s volumes.

Total net patient service revenue was $5.7 billion, down 3% year over year. Net patient service revenues had the sharpest drop off in March, decreasing more than 15% in that month alone.

“COVID-19 has been encountered across all Ascension markets, to varying degrees, and has had an adverse effect,” Ascension management wrote in comments on the results.​

The system, which operates more than 2,600 sites of care, including 150 hospitals across 20 states and the District of Columbia, has received federal help to make up for lower-than-expected revenue. Ascension said in the filing it has received Coronavirus Aid, Relief and Economic Security Act​ funding before March 31. Though a spokesperson declined to tell Healthcare Dive a specific figure, Ascension has received at least $211 million from HHS, according to a New York Times review of the grants finding large hospitals with deep pockets are receiving the lion’s share of congressional funds.

Smaller hospitals that serve more vulnerable populations were deeply critical of HHS’ initial method to distribute the CARES funds, which put high margin hospitals at an advantage. The department did not take into account hospitals’ existing financial resources in distributing the pot.

Nine-year-old Ascension also received just under $2 billion in accelerated loans from the Medicare program.

Normal increases in operations compounded the negative effect of the pandemic, Ascension said. The system was funneling money into expanding service lines and sites of care and standardizing revenue cycle services prior to the COVID-19 crisis, which sharply increased expenses.

Supplies expenses particularly jumped in March by almost 7%, as the system hustled to procure needed equipment at unexpected rates to prepare for an anticipated surge in COVID-19 patients.

 

 

 

 

Ascension reports $2.7B net loss in Q3

Posted on by • Posted in Cash, Cash Reserves, Coronavirus, Crisis, Crisis Management, Economic Crisis, Economic Stimulus, Employee Benefits, Employee Furlough, Employee Hiring Freeze, Employee Layoffs, Employee Pay Cuts, Employee Protections, Employer-Based Health Insurance, Health System, Hospital, Hospital Industry, Medicare Advance Payments, Net Income, Nonoperating Income, Operating Expenses, Operating Income, Operating Margin, Operating Performance, Operating Revenue, Pandemic, Rev Cycle Management, Revenue Cycle, The CARES Act • Leave a comment

https://www.beckershospitalreview.com/finance/ascension-reports-2-7b-net-loss-in-q3.html?utm_medium=email

Ascension, Google working on 'secret' patient data project, says ...

St. Louis.-based Ascension saw revenue decline in the three months ended March 31, and it ended the period with a net loss, according to unaudited financial documents. 

The 150-hospital system reported operating revenue of $6.1 billion in the third quarter of fiscal year 2020, down 2.5 percent from the same period a year earlier. Net patient service revenue dramatically declined in March due to a drop in patient volume attributed to the COVID-19 pandemic.

“COVID-19 has been encountered across all Ascension markets, to varying degrees, and has had an adverse effect on the system’s revenues and operating margin,” management wrote in comments on the financial results.

Looking at the nine months ended March 31, net patient service revenue was up 1.9 percent year over year due to several factors, including an increase in physician office visits and expansion of service lines and sites of care. 

The health system’s expenses climbed more than 3 percent year over year to $6.4 billion in the third quarter, and expenses were up nearly 4 percent in the nine months ended March 31. Higher expenses related to expanded service lines and the transition toward standardized revenue cycle services pushed the system’s expenses higher before the COVID-19 pandemic, Ascension said. 

Ascension ended the most recent quarter with an operating loss of $429.4 million, compared to operating income of $80.1 million a year earlier. During the nine months ended March 31, the health system’s operating loss totaled $344.9 million.

After factoring in nonoperating items, including losses from investments of nearly $2.5 billion, Ascension reported a net loss of $2.7 billion in the third quarter of fiscal year 2020. In the same period a year earlier, the system recorded investment income of $1.1 billion and net income of $1.2 billion.

To help offset financial damage caused by the COVID-19 pandemic, Ascension received funds from the $175 billion in relief aid Congress has allocated to hospitals and other healthcare providers to cover expenses and lost revenue tied to the pandemic. The health system received $211 million in federal grants, according to The New York Times.

Ascension also applied for and received about $2 billion of Medicare advance payments in April, which must be repaid.