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 of others have implemented layoffs.
Below are 11 hospitals and health systems that announced layoffs since Sept. 1, most of which were attributed to financial strain caused by the pandemic.
1. NorthBay Healthcare, a nonprofit health system based in Fairfield, Calif., is laying off 31 of its 2,863 employees as part of its pandemic recovery plan, the system announced Nov. 2.
2. Minneapolis-based Children’s Minnesota is laying off 150 employees, or about 3 percent of its workforce. Children’s Minnesota cited several reasons for the layoffs, including the financial hit from the COVID-19 pandemic. Affected employees will end their employment either Dec. 31 or March 31.
3. Brattleboro Retreat, a psychiatric and addiction treatment hospital in Vermont, notified 85 employees in late October that they would be laid off within 60 days.
4. Citing a need to offset financial losses, Minneapolis-basedM 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.
5. Lake Charles (La.) Memorial Health Systemlaid 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.
6. Burlington, Mass.-based Wellforce laid off 232 employees as a result of operating losses linked to the COVID-19 pandemic. The health system, comprising 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.
7. 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.”
8. 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.
9. Mercy Iowa City(Iowa) announced in September that it will lay off 29 employees to address financial strain tied to the COVID-19 pandemic.
10. Springfield, Ill.-based Memorial Health Systemlaid 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.
11. Watertown, N.Y.-based Samaritan Healthannounced 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.
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.
Abstract: This article focuses on the correct strategic response to the impending implementation of price transparency on New Year’s Day of next year.
I have stated before that I have multiple articles in process at any given time. Some of them have been ‘in process’ for years because newer topics sometimes rise to the queue’s top. Price transparency is an example of such a case. I have a friend who is developing AI-enabled solutions to help organizations respond to price transparency government diktats. Few people beyond healthcare CFOs, healthcare financial consultants, and accountants have any useful understanding of how convoluted hospital pricing has become due to decades of ill-conceived government policy for the most part.
Another problem is endless confusion over terms. People frequently interchange the terms ‘price’, ‘cost’, ‘payment’, and ‘reimbursement’ in situations where the polar opposite is true on the other side of the issue. In other words, ‘cost’ to a payor is price or reimbursement to a provider.
Anyway, my friend’s questions finally inspired me to go to the Federal Register, acquire the final rule, and begin the process of learning where government is headed with these regulations. There are probably at least fifty diatribe angles I could launch into over the final rule, but I will confine my rant to only a couple of points.
First, the final draft of the rule is ‘only’ 331 pages long. The three-column final rule in the Federal Register is ‘only’ 83 pages long. That pales compared to Obamacare that is over 1,200 pages long, so by government standards, this is but a trifle of regulation.
Secondly, some parts of the final rule are actually funny. For example, CMS estimates that the average hospital will spend only 150 staff hours in the first and 46 staff hours in subsequent years complying with price transparency requirements. Is it constitutional for government to compel private enterprises to disclose the terms of what they thought were private contracts? Apparently so. Once government breaks this ice, will any agreement of any type ever be private?
As I have discussed price transparency with healthcare leaders, I sense that leaders are currently focused on technical compliance with the regulations. With COVID on their plate simultaneously, they have little capacity to take on strategic financial planning.
The final rule lays out in excruciating detail what providers face complying with the regulation. Reading the comments and responses is equally entertaining. CMS repeatedly says something to the effect; we heard your concern, and we’re proceeding as planned anyway. Litigation brought by the AHA and others has to date been unsuccessful in slowing stopping the price transparency snowball that is now most of the way down the mountain.
So, what are you supposed to do? The CFO and CIO will work, possibly with consultants’ assistance, to prepare the organization’s data release. Soon after the release occurs, expect the defecation to hit the rotary oscillator. The press will call out organizations with high prices, and the rancor over learning what some systems have been able to get from third-party payors will be entertaining, to say the least. Many people believe that one of the primary motivators of the massive consolidation occurring in the healthcare industry is the market leverage exerted by growing systems on third-party payors to obtain otherwise unachievable reimbursement rates.
Regardless of the course of action following price releases in January, the intended and most likely result of this initiative is to drive prices to a lower common denominator. A lot of people think Medicare rates will become that benchmark. There are two significant issues that I did not see addressed in the pricing rule that will have the effect of transferring substantial risk to providers.
The first is that there will be little if any provision for recognition of complications, comorbidities, and hospital-acquired conditions that can dramatically impact the cost of care in a given diagnosis.
The second is the elephant in the room. The current pricing system has developed over time to facilitate cross-subsidization among payors. There is a reason that commercial rates are so high that has nothing to do with the cost of providing care. I have stated before that, government has turned the entire healthcare industry into a taxing authority to extract tax from commercial payors for the benefit of government payors that routinely reimburse providers below the cost of providing care. It has been entertaining to watch the reaction of Boards of Directors when they first realize that the healthcare system has been forced by government into a wealth redistribution mechanism.
So, what happens as providers lose the ability to cross-subsidize the cost of care? Very few hospitals (<10%) are profitable on Medicare, and it is doubtful that any hospital is breaking even on services provided to Medicaid patients. In my experience, hospital reimbursement for self-pay patients is less than 5% of charges. If the prices hospitals realize for services start falling and they lose the current ability to cross-subsidize the cost of care . . . . . well, you don’t need an MBA to understand the likely outcome.
What to do? If (when) prices start falling and providers lose pricing leverage, the only place to turn is operating expense. Hospitals that have failed to undertake serious, highly focused, and robust operating cost reduction programs that yield quantifiable results may not have a very bright future. If your organization is not in the bottom quartile of operating cost compared to its peer group and part of your mission is to remain independent, you must be losing sleep. In a recent article related to COVID Response, I argued that the time has come to get after clinical process variance that is the source of most of the high cost, waste, and abuse in the healthcare system.For most organizations, the days of sourcing cheaper supplies and sending nurses home early are, for the most part, over as there is little if any juice remaining in that lemon.
If, as a leader, you do not have a plan that gets you to break-even on Medicare within the next 12-18 months, you had better have a plan B, something like tuning up your CV. I can help you with your response to price transparency, working on your CV, or helping manage your next career transition as the case may turn out. I am as close as your phone. Best of luck.
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Here are nine hospitals and health systems with strong operational metrics and solid financial positions, according to reports from Fitch Ratings, Moody’s Investors Service and S&P Global Ratings.
1. St. Louis-based Ascension has an “AA+” rating and stable outlook with Fitch. The system has a strong financial profile and a significant presence in several key markets, Fitch said. The credit rating agency expects Ascension will continue to produce healthy operating margins.
2. Phoenix-based Banner Health has an “AA-” rating and stable outlook with Fitch and S&P. Banner’s financial profile is strong, even taking into consideration the market volatility that occurred in the first quarter of this year, Fitch said. The credit rating agency expects the system to continue to improve operating margins and to generate cash flow sufficient to sustain strong key financial metrics.
3. Cincinnati-based Bon Secours Mercy Health has an “AA-” rating and stable outlook with Fitch. The health system has a good payer mix, a leading position in several of its markets and adequate margins to support its growth, Fitch said. The credit rating agency expects the system to maintain strong operating profitability.
4. Children’s Hospital of Philadelphia has an “Aa2” rating and stable outlook with Moody’s and an “AA” rating and stable outlook with S&P. The hospital has a strong market position and healthy liquidity, Moody’s said. The credit rating agency expects CHOP’s market position and brand equity will support its recovery from disruption caused by COVID-19.
5. Milwaukee-based Children’s Wisconsin has an “Aa3” rating and stable outlook with Moody’s and an “AA” rating and stable outlook with S&P. The health system has strong cash flow margins, Moody’s said. The credit rating agency expects the health system’s financial performance to remain solid, given its commanding market presence and demand for services.
6. Philadelphia-based Main Line Health has an “AA” rating and stable outlook with Fitch. The credit rating agency expects the system’s operations to recover after the COVID-19 pandemic and for it to resume its track record of strong operating cash flow margins.
7. Midland-based MidMichigan Health has an “AA-” rating and stable outlook with Fitch. The system has generated healthy operational levels through fiscal year 2020, and Fitch expects it to continue generating strong cash flow.
8. Columbus, Ohio-based Nationwide Children’s Hospital has an “Aa2” rating and stable outlook with Moody’s. The system has a strong market position in pediatric services in Columbus and the broad central Ohio region, and its advanced research capabilities will support volume recovery from disruption caused by COVID-19, Moody’s said. The credit rating agency expects Nationwide Children’s margins to remain strong and for cost management initiatives and volume recovery to drive improvements.
9. Chicago-based Northwestern Memorial HealthCare has an “Aa2” rating and stable outlook with Moody’s. The health system had strong pre-COVID margins and liquidity, Moody’s said. The credit rating agency expects the system to maintain strong operating cash flow margins.
Some rural hospitals that were already struggling are now in serious financial trouble due to the coronavirus.
The suspension of elective surgery and non-urgent care in most states led to an abrupt drop in patient volumes and hospital revenue. That loss, combined with the cost of preparing for COVID-19 protections for patients and employees, has forced rural hospitals into deeper distress. It’s especially important in these challenging circumstances to keep a close eye on key metrics that gauge a hospital’s financial health. By monitoring indicators, creating transparency and responding swiftly to warning signals of financial distress, hospitals can stave off bankruptcy or closure and establish a new path toward long-term sustainability.
A Shared Responsibility
Signs that a hospital is headed for, or already in, financial distress include obvious indicators such as declining revenues or a dip in patient volume. Although some distress signals seem loud and clear, problems persist at many hospitals due to lack of communication and financial assessment across the enterprise. Too often, it’s left to the CFO to monitor overall financial health by measuring against budgets and recent trends. However, a regular review of key metrics should be a shared responsibility for the entire healthcare leadership team.
Five Data Points to Review
Hospitals may need to adjust key targets to bring them in line with what’s realistically achievable while the pandemic persists, particularly when it comes to productivity, PPE costs and net revenue metrics. Think wisely and as a team about how to reassess targets. The following data points should be monitored regularly.
Aggregate volume and provider utilization trends. This data can offer a big-picture perspective to leaders and managers across departments.
Operating ratios, including expenses as a percentage of net operating revenue. Make sure costs such as labor, supplies and purchased services remain in check.
Labor costs relative to patient volume. Measure productivity in each department against department specific staffing targets as well as the overall FTE per adjusted occupied bed target for the hospital as a whole.
Patient revenue indicators. These include bad debt percentage and net to gross percentage by payer class. Are there shifts in payer mix that need to be addressed?
Liquidity ratios. These include net days in patient accounts receivable and cash collections as a percentage of net revenue. What steps can be taken to improve cash flow?
Information Gathering
Hospital leadership should conduct a monthly review of the key measures listed above. In addition, procedures should be put in place by the hospital’s finance department, with input from department managers, to produce accurate monthly stats and financial performance metrics to facilitate these periodic reviews. Annually, take a closer look at these financial indicators, as these will form the basis of strategic planning.
Federal Funding
The COVID-19 crisis reinforces the need for financial diligence and discipline. Rural hospitals received federal funding to help them during the crisis, and this created another layer of data to monitor. Whether in the form of a CARES Act grant, a PPP loan or some other type of funding, these outlays must be closely controlled, properly managed and restricted in use so the hospital does not run out of cash. In certain cases, the federal government will require hospitals to document the use of funds. For example, for CARES Act stimulus payments, hospitals must provide attestation (quarterly beginning in July) that funds are used for COVID-related costs and COVID-related loss of revenue. In any case, CHC recommends that hospitals set up a tracking system to account for these funds. Download a financial dashboard to help.
Connect the Dots
Regular reviews of financial indicators can identify operational best practices, support strategic planning efforts, create accountability, and, if necessary, redirect financial sustainability efforts. The COVID-19 crisis accelerates the timeline during which financial improvements must be made.
The most critical element of this entire process is answering, “Why?” This means finding the root causes for financial difficulties. Another critical element is clear communication of expectations and goals across hospital leadership in order to accomplish desired changes. The team, armed with data and clear objectives, can then get to the root of any problems.
Philadelphia-based Jefferson Health is taking steps to reduce costs to help offset losses tied to the COVID-19 pandemic.
The 14-hospital system plans to eliminate between 500 and 600 positions through attrition and will cut pay for its “most senior executives,” according to the Philadelphia Business Journal.
Jefferson Health is making cuts after reporting a net loss of $298.7 million in the fiscal year ended June 30. The system posted a loss after receiving $320 million in grants made available under the Coronavirus Aid, Relief and Economic Security Act to help cover lost revenue and expenses linked to the pandemic, according to The Philadelphia Inquirer.
“As one of the health systems in the United States with the largest amount of Covid patients during the surge, and one of the lowest employee infectivity rates, we took a ‘no expense is too much to protect our employees’ approach with PPE and other measures that drove up short-term expenses,” Stephen Klasko, MD, president of Thomas Jefferson University and CEO of Jefferson Health, told the Philadelphia Business Journal.
Dr. Klasko said patient volumes are beginning to rebound, and the health system is ahead of budget for fiscal year 2021.
“We made a conscious decision, as the region’s second-largest employer, to do no furloughs and only very few pre-planned layoffs during the pandemic surge,” Dr. Klasko told the Philadelphia Business Journal. “Due to our financial stewardship and growth over the past five years, our balance sheet was very stable and remains very stable despite the pandemic tsunami.”
In addition to cutting unfilled positions and reducing executive pay, the health system is taking a few other steps to achieve savings, including a pay freeze and a one-year suspension of employer contributions to employee retirements plans beginning Jan. 1.
Trinity Health saw revenue decline in fiscal year 2020, and the Livonia, Mich.-based health system ended the period with a loss, according to recently released financial documents.
Trinity Health saw revenue decline 2.4 percent year over year to $18.8 billion in the 12 months ended June 30. The health system attributed the drop in revenue to the COVID-19 pandemic and the divestiture of Camden, N.J.-based Lourdes Health System in June 2019.
The 92-hospital system’s expenses were down 1.4 percent year over year in fiscal 2020. Trinity Health took several steps to reduce operating and capital spending in response to the pandemic, including implementing furloughs and reducing salaries for executives.
Trinity Health reported an operating loss of $344.7 million for fiscal 2020, compared to operating income of $106.8 million a year earlier.
After factoring in investments and other nonoperating items, Trinity Health posted a net loss of $75.5 million in fiscal 2020, down from net income of $786 million in fiscal 2019. Lower nonoperating gains in the most recent fiscal year were primarily driven by the pandemic’s effect on global investment market conditions, the health system said.
Eight months into COVID-19, national healthcare volumes are still lagging pre-pandemic levels. The graphic above shows highlights from Strata Decision Technology’s recent analysis of volume data from 275 hospitals nationwide between March and August, and reveals that inpatient, and especially emergency department, volumes are still well below 2019 levels.
This isn’t surprising. Consumer confidence in healthcare facilities hasn’t changed much since April, with many still reporting feeling unsafe in emergency care and hospital settings. Even some outpatient providers are still seeing lags compared to last year.
While outpatient volume as a whole has rebounded, critical outpatient diagnostics, including mammographies and colonoscopies, are still down significantly, leading to reduced downstream oncology and surgical volume as well, at least in the short-term.
COVID-19 is also accelerating the outmigration of high-margin surgical procedures like total knee replacements. Comparing a two-week period in August to the same period last year reveals that inpatient knee procedures are down by nearly 40 percent, while similar outpatient procedures are up over 80 percent.
As Strata Executive Director Steve Lefar said in a recent conversation with Gist Healthcare Daily’s Alex Olgin, these data expose “an elasticity of demand the healthcare industry never even knew existed” and that “the demand curve for healthcare services may be permanently adjusted because people are just changing their behaviors.”
While we expect volumes will ebb and flow over coming months in step with the local severity of COVID-19, health systems should plan for a longer-term “new normal” with volume below pre-pandemic levels.
The last time margins sank so deeply into the red was after the Balanced Budget Act of 1997, though today’s margins are faring worse.
COVID-19 continues to have deep and lingering financial impacts on hospitals in New Jersey. A midyear analysis of financial data shows nearly 60% of the state’s hospitals in the red and an average statewide operating margin of negative 4%.
The effects have been profound, and serve as a potential microcosm of the continuing impact of the coronavirus on hospital operating margins nationwide.
The decline in the state is the result of a dual blow of declining revenues and rising expenses, according to the report from the Center for Health Analytics, Research and Transformation at the New Jersey Hospital Association. Officials said the state’s hospitals haven’t experienced this level of fiscal distress in more than 20 years.
In fact, the last time margins sunk so deeply into the red was in the late 1990s. At that time, the Balanced Budget Act of 1997 resulted in significant payment cuts to the state’s hospitals, with margins falling to -1.7% and -2.3% in 1998 and 1999, respectively. And those numbers are not as distressing as the ones being experienced during the public health crisis.
CHART’s data, comparing June 30, 2019, with June 30, 2020, shows that total patient revenues declined 6.6%. Emergency department cases plummeted 23%, while hospital admissions fell by 8% and outpatient visits dropped by 22%.
An additional aggravating factor is a 12% increase in total operating expenses, because COVID-19 required hospitals to redirect resources to increase staffing; boost supplies of personal protective equipment, pharmaceuticals and ventilators; and modify operations and facilities to expand capacity.
CHART’s analysis takes a closer look at the disruption of elective procedures in New Jersey hospitals and its lingering impact. Governor Phil Murphy’s Executive Order 109, in effect March 27 through May 26, required hospitals to suspend elective procedures during the state’s COVID-19 surge. CHART used claims data for some of the highest-volume elective procedures performed in New Jersey hospitals – bariatric surgery, pacemaker insertion, spinal fusion, knee replacement and hernia repair – to gauge the impact.
In April and May 2019, the state’s hospitals performed these procedures 4,336 times. That number plummeted to just 400 statewide in April and May 2020. The state’s executive order suspending procedures during this time allowed exemptions for cases in which a delay would result in “undue risk to the current or future health of the patient.”
The year-over-year decline persisted even when the suspension was lifted. In June and July of 2019, 4,194 procedures from the list of high-volume procedures were performed, compared with 3,191 in June and July of 2020.
But the greatest decline in volume by percentage was seen in hospital emergency departments, where cases nosedived 23.4% between June 30, 2019, and June 30, 2020. That has healthcare leaders concerned.
NJHA officials said a hospital turnaround is critical for the statewide recovery from the coronavirus.
“The state’s hospitals pump $25 billion annually into the New Jersey economy and employ 154,000 people,” said NJHA’s Roger Sarao, vice president of economic and financial information and lead author of the CHART report. “They are an essential part of the road to recovery from this public health and economic crisis.”
THE LARGER TREND
The effects of the pandemic on the nation’s hospitals will be long-lasting, especially among nonprofits. A recent Fitch Ratings analysis showed that the full effects have yet to be felt.
The agency predicted that capital spending will be greatly reduced in the initial years post-pandemic, though some of it will ultimately accelerate due to anticipated merger and acquisition activity.
Fitch expects hospitals to take on added expenses to perform the same level of service, and predicts revenue declines from a shift in payer mix.
Hospital system CommonSpirit Health reported operating revenue losses of $550 million during its fiscal year that ended in June, as the COVID-19 pandemic continues to roil patient volumes.
The 137-hospital system reported its financial earnings Friday for the 2020 fiscal year that ended June 30. CommonSpirit’s expenses also surged during the pandemic as more resources were needed to screen visitors and staff.
“Although it varies significantly by division, beginning the middle of March, the COVID-19 pandemic caused up to a 40% slowdown in volumes,” CommonSpirit’s financial report said. “As communities heeded guidelines to avoid hospitals for non-emergent issues, appointment volume, especially for specialty practices, fell and emergency department volume declined.”
CommonSpirit’s patient volumes did rebound after shelter-in-place orders started to be lifted in April and May, but the volumes are still below pre-pandemic levels.
At the end of the system’s fiscal year on June 30, the volumes on adjusted admissions were down 6.2% compared with the 2019 fiscal year.
Adjusted patient days for the fiscal year were also lower than the same period in 2019 by 5.7%.
At the same time, net patient and premium revenues declined by $239 million, or 0.9% over the same period in 2019.
“The decrease is primarily due to the impact of the COVID-19 pandemic and increased charity care, partially offset by a stable payor mix,” the earnings said.
Overall, CommonSpirit recorded an operating loss of $550 million for the 2020 fiscal year, which was an improvement on the $617 million in losses from 2019.
But those 2020 losses ballooned up to $1.4 billion when not taking into account money the system received from a $175 billion provider relief fund Congress set up as part of the CARES Act to help prop up hospitals and other providers.
The system also reported a $1.3 billion decline in earnings before interest, tax, depreciation and amortization and nonoperating income from March through June.
About 62% of the lost EBITDA has been recouped through the CARES Act funding, and another $500 million remains to be regained, CommonSpirit said.
Overall, CommonSpirit has recorded $826 million in money from the provider relief fund. It also got another $2.6 billion from the Medicare Accelerated and Advance Payment Program, which the system will have to repay.
The system anticipates it will defer $410 million in employer payroll taxes to December 2022, a flexibility also afforded under the CARES Act.
“While the aid received from the programs above provides much needed assistance during this crisis, CommonSpirit is unable to assess the extent to which the amounts and benefits received, or to be received, will offset the long-term changes in volumes, payor mix or service mix,” the report said.
The Department of Health and Human Services has more than $50 billion to still give out to hospitals, but some hospital groups say that more money is needed to combat the financial crisis caused by the pandemic. Talks on a new coronavirus relief deal have stalled in Congress.
While some larger for-profit systems such as HCA and Tenet have posted profits thanks to the provider relief funding, other not-for-profit systems such as Trinity Health and some smaller systems have reported struggles with overcoming the new financial crisis.
HENRY KOTULA 