Providence, 1st to treat COVID-19 patient, posts $1.1B loss

https://www.healthcaredive.com/news/providence-1st-to-treat-covid-19-patient-posts-11b-loss/578585/

Dr. Ryan Keay: Medicaid Plays a Crucial Role in Alleviating the ...

Dive Brief:

  • Providence posted a net loss of $1.1 billion and operating loss of $276 million for the first quarter of 2020, drastically down from a net gain of $543 million and operating loss of $4 million in the first quarter of 2019 as the COVID-19 pandemic has slashed financial operations for providers across the country.
  • The Catholic nonprofit system saw investment losses of $763 million as stock market volatility followed stay-at-home orders in March and April for much of the United States. That compared to a $582 million investment gain in the prior-year period.
  • Patient volumes dropped as Providence suspended non-emergency procedures amid the pandemic. Surgeries declined 8%, total outpatient visits dropped 3% and acute patient days were down 5%, according to a financial report filed late last week.

Dive Insight:

Providence Regional Medical Center in Everett, Washington, was the first to knowingly treat a COVID-19 patient in the United States — on Jan. 20. Since then, cases have plateaued, with the rate becoming “more manageable” throughout the communities Providence serves.

The system suspended elective procedures the week of March 16 and saw telehealth appointments skyrocket from an average of 50 visits per day to more than 12,000. “Now, the critical path forward is reopening services safely so that we can get back to patients who have delayed their care,” Providence CFO Venkat Bhamidipati said in a statement.

Providence reported receiving $509 million from the Coronavirus Aid, Relief, and Economic Security Act and $1.6 billion in accelerated Medicare payments. The system tapped $800 million in private credit lines as well. As of the end of the first quarter, Providence had 182 days cash on hand, down slightly from the prior-year period.

The hospital operator is far from alone in reporting steep first-quarter losses, and ratings agencies predict the second quarter will not be kind to nonprofits either.

So far, the system has not imposed layoffs but has cut overtime and seen voluntary furloughs and executive pay cuts. “If patient census and revenue does not return to anticipated levels, we would also consider involuntary options,” according to the filing.

Providence’s operating EBIDTA margin was down to 0.9% in the first quarter of this year from 5.5% in the first quarter of 2019.

Operating expenses increased 10% to $6.6 billion, driven by increases in labor costs and supplies. The system noted paying “significantly higher” premiums to obtain personal protective equipment and increased costs for ICU medications amid the pandemic.

The filing discloses a complaint under the California Corporations Code from earlier this month. It was filed by two of the three corporate members of Hoag Hospital, seeking to dissolve the third member and remove Hoag as an obligated group member. Providence states it “believes that the complaint is without merit, and believes the legal process will vindicate this position.”

The 51-hospital system created by the 2016 merger of Washington-based Providence and California-based St. Joseph is coming off a 2019 surplus of $1.36 billion, swinging to the black from 2018’s deficit of $445 million.

 

 

 

 

UW Medicine to furlough 4,000 union employees

https://www.beckershospitalreview.com/finance/uw-medicine-to-furlough-4-000-union-employees.html?utm_medium=email

UW Medicine furloughing 1,500 staffers | News | dailyuw.com

UW Medicine will furlough approximately 4,000 unionized employees due to financial challenges related to COVID-19 response, the Seattle-based organization said May 25.

The furloughs will last at least one week and as many as eight weeks. Affected employees will maintain their healthcare benefits, including insurance, during the furlough.

“This has been a very difficult, but necessary, decision to address the financial challenges facing UW Medicine and all healthcare organizations responding to the COVID-19 pandemic,” Lisa Brandenburg, president of UW Medicine Hospitals & Clinics, said in a news release. “We have taken deliberate steps to ensure patient care is not impacted by aligning staff levels with current and predicted patient volumes including the return of elective procedures, expanded in-person clinical services and continued expansion of telehealth, while ensuring UW Medicine is prepared to respond to future surges of patients with COVID-19.”

The decision comes one week after UW Medicine announced furloughs of 1,500 professional and nonunion staff members. UW Medicine said executive leaders, directors and managers are also participating in furloughs.

The actions are intended to help the organization address an anticipated $500 million loss from the pandemic.

 

 

 

Advocate Aurora reports Q1 operating loss, gets $328M bailout

https://www.beckershospitalreview.com/finance/advocate-aurora-reports-q1-operating-loss-gets-328m-bailout.html?utm_medium=email

MyAdvocateAurora | Health Record | Advocate Aurora Health

Advocate Aurora Health saw revenue increase year over year in the first quarter of this year, but it ended the period with an operating loss, according to recently released unaudited financial documents

Advocate Aurora Health, which was formed in 2018 and has dual headquarters in Downers Grove, Ill., and Milwaukee, reported revenue of $3.1 billion in the first quarter of 2020, up from $3 billion in the same period a year earlier. Patient service revenue climbed 3.5 percent year over year, while capitation revenue dropped 13.2 percent.

The health system said it began postponing or canceling elective procedures on March 17 due to the COVID-19 pandemic, and the public curtailed visits to physicians, clinics and emergency rooms for fear of contracting the virus.

“These actions have served to decrease revenues from non-COVID-19 patients while driving up costs to prepare for and care for COVID-19 patients with minimal additional revenues from these patients,” Advocate Aurora said.

To help offset financial damage caused by the COVID-19 pandemic, the health system implemented cost-reduction measures. Since April 1, it has also received $328 million in grants made available through the Coronavirus Aid, Relief and Economic Security Act and about $730 million in advance Medicare payments, which must be paid back.

Advocate Aurora’s expenses were up 9 percent in the first quarter of this year compared to the same period of 2019. The increase was due in part to it acquiring the remaining 51 percent interest in Bay Area Medical Center in Marinette, Wis., in April 2019.

Advocate Aurora posted an operating loss of $85.6 million in the first quarter of this year. That’s compared to operating income of $112.8 million in the same period a year earlier. Excluding nonrecurring expenses, the health system posted an operating loss of $49.3 million in the first quarter of this year and operating income of $131.2 million a year earlier.

The 26-hospital system reported a nonoperating loss of $1.23 billion in the first quarter of this year, which was largely attributable to investment losses. Advocate Aurora ended the first quarter with a net loss of $1.3 billion, compared to net income of $596.8 million a year earlier. 

As of March 31, the health system had 229 days cash on hand, down from 274 days in December 2019. 

 

 

 

 

Essentia Health lays off 900 employees

https://www.beckershospitalreview.com/finance/essentia-health-lays-off-900-employees.html?utm_medium=email

Essentia Health to lay off 900 employees, including 178 workers in ...

Essentia Health is laying off 900 employees, about 6 percent of its workforce, to help offset severe financial damage caused by the COVID-19 pandemic.

The Duluth, Minn.-based health system is facing $100M in losses due to declines in patient volumes since the beginning of March. Essentia has taken several steps to help offset those losses, including placing 850 employees on administrative leave, reducing physician and executive compensation, eliminating certain leadership roles and limiting capital spending. The health system said it is now forced to permanently reduce its workforce.

“Despite our best efforts, the many cost-reduction measures we’ve taken over the last several weeks are not sufficient to preserve our mission and the health of the organization,” Essentia Health CEO David C. Herman, MD, said in a news release. “This has prompted our leadership team to carefully consider the most difficult decision we’ve faced since I joined Essentia five years ago and move forward with permanent layoffs.”

Essentia said it will continue to provide health insurance for noncontract employees affected by layoffs for the next three months. The health system said the 850 employees on administrative leave will be called back as needed. 

 

 

 

 

COVID-19 pushes Mayo Clinic’s operating income into free fall

https://www.healthcaredive.com/news/covid-19-pushes-mayo-clinics-operating-income-into-free-fall/578191/

Farrugia calls 2019 'a year of remarkable growth' as Mayo reports ...

Dive Brief:

  • Prior to the onset of the novel coronavirus, Mayo Clinic was cruising along with a healthy operating margin of 6.7% during the first two months of the quarter. But by the close of the period, the operating margin was squeezed to just 0.9% while net operating income fell off a cliff, free falling 88% to $29 million compared to the first quarter of 2019.
  • Due to contracting services and the near closure of its outpatient business in response to the pandemic, revenues for the quarter declined nearly 4% while expenses rose 3% compared to the prior-year period.
  • The fluctuation in the financial markets caused a downturn in Mayo’s investment portfolio, leading to an overall net loss of $623 million for the Rochester, Minnesota-based nonprofit health system.

Dive Insight:

Mayo Clinic is the latest hospital operator to report it first quarter results have been battered by the pandemic.

The system, which took in more than $1 billion in operating income in 2019, joins other major hospital operators that reported a dip in volumes amid the public health crisis, including HCA and CommonSpirit.

The second quarter is not likely to look better, according to Fitch Ratings. The second quarter looks bleak as the ratings agency issued an ominous report predicting it would be the “worst on record” for most nonprofit hospitals.

Yet, some of the for-profit hospital operators see May as the beginning of the recovery. Both Tenet and CHS executives seemed upbeat about the prospects for this month, noting it was the start of resuming elective procedures that had been put off.

Despite the hospital sector as a whole taking a major hit from the pandemic, big wealthy systems like Mayo have significant rainy day funds. Mayo reported cash and investments of more than $10.6 billion as of March 30 with 252 days cash on hand.

In April, Mayo issued a voluntary notice about how the virus was taking on its business, noting reduced salaries for executives and physicians, furloughs and a hiring freeze, among other efforts.​

In its first quarter report, Mayo detailed the ways in which it’s tackling the novel coronavirus on the medical front, including leading a program, approved by the FDA, that gives severely sick COVID-19 patients plasma from those who were previously sickened but have since recovered from the virus.

Mayo said it’s preparing the program’s first safety report on the first 5,000 patients to receive the infusion. As of May 12, more than 9,300 patients have been infused, Mayo said.

The system also runs COVID-19 testing, and said it is now able to administer 8,500 molecular tests and 20,000 serologic tests, which look for antibodies to the virus in those that may have been previously infected, daily.

 

 

CommonSpirit posts $1.4B loss, says full COVID-19 impact unknown

https://www.healthcaredive.com/news/commonspirit-posts-14b-loss-too-soon-to-project-long-term-covid-19-impac/578100/

Locations | CommonSpirit Health

Dive Brief:

  • CommonSpirit Health, sprung from last year’s merger of California-based Dignity Health and Colorado-based Catholic Health Initiatives, reported a loss topping $1.4 billion in the fiscal third quarter ending March 31, although adjusted revenues were flat compared to the third quarter of 2019. The biggest proportion of losses were tied to investments, as its portfolio dropped in value by nearly $1.1 billion. Its total net assets are down nearly $2.5 billion from a year ago.
  • Like many other hospital systems, CommonSpirit reported a drop in patient volumes that began in mid-March as states began issuing lockdown orders. Acute admissions dropped more than 5% for the quarter compared to a year ago.
  • CommonSpirit did receive more than $700 million in Coronavirus Aid, Relief, and Economic Security Act funds, although since it was received on March 31 it will be booked into its fiscal fourth quarter financial statements. The system received another $2.6 billion in accelerated payments from CMS and anticipates receiving another $410 million in disaster relief funding and from the Paycheck Protection Program.​

Dive Insight:

The COVID-19 pandemic is continuing to ravage the bottom lines of providers, and the nation’s largest not-for-profit hospital system, CommonSpirit Health, is no exception.

Its first full year as a unified system is 2020, and the COVID-19 pandemic is challenging the 134-hospital organization in ways it likely never anticipated. Admissions are down for the foreseeable future, coupled with the need to spend tens of millions of dollars on personal protective equipment, respirators and to divert a significant amount of resources toward treating coronavirus patients.

Fitch Ratings said COVID-19 is to blame for the worst second quarter for most U.S. hospitals and systems.

For the third quarter of 2020, CommonSpirit reported an operating loss of $145 million, compared to a pro forma $124 million loss reported by Dignity and CHI for the first quarter of 2019.

CommonSpirit posted a net loss of $1.4 billion for the third quarter, compared to a pro forma net gain of $9.7 billion for the third quarter of 2019. However, $9.2 billion of that came from what CommonSpirit termed a “contribution from business combination,” the net assets received from both parties by merging with one another. For the first nine months of fiscal 2020, CommonSpirit lost $1.1 billion on revenue of $22.4 billion, compared to a net gain of $9.5 billion on revenue of $21.6 billion over the same period in fiscal 2019.

And despite receiving some $3.7 billion in federal assistance, CommonSpirit said in its quarterly financial disclosures that it remains too soon to tell what the impact of COVID-19 will be on the organization over the long-term.

Prior to the pandemic, CommonSpirit’s financial position was trending stronger compared to its pre-merger state. Seven of its 14 operating divisions reported a jump in revenue during the quarter compared to 2019.

 

 

 

 

COVID-19 shreds Sutter Health’s finances in matter of weeks

https://www.healthcaredive.com/news/covid-19-shreds-sutter-healths-finances-in-matter-of-weeks/578021/

Dive Brief:

  • Sutter Health, one of California’s largest and most powerful hospital networks, is getting pounded by losses related to the COVID-19 outbreak, according to a report issued to bondholders.
  • Sutter posted an operating loss of $236 million for the first quarter ending March 31, and a net loss of almost $1.1 billion. That’s even though California officials did not begin locking down activities in the state until the second part of March. Sutter saw an operating loss of $360 million in April alone, after the first quarter concluded, suggesting net losses for the second quarter could be even larger.
  • Much of the losses are attributed to the abrupt cutoff of patient flow to Sutter hospitals, clinics and medical offices. Only 5.7% of its intensive care unit beds are being used to treat COVID-19 patients, Sutter reported, and almost 32% of its ICU beds were unused as of May 11.

Dive Insight:

For decades, Sacramento-based Sutter Health has been considered the most powerful hospital operator in Northern California, with facilities throughout the Bay Area and even the more rural part of the state north of San Francisco. Critics allege its market dominance contributes to the long-term cost imbalance for hospital services between the northern and southern parts of the state.

Like many other chains and hospitals, it took only a few weeks of the COVID-19 outbreak and California’s statewide stay-at-home order to hamstring Sutter’s operations. Between March 17 and the end of April, inpatient bed days at Sutter hospitals declined by 23%, its ambulatory facilities have experienced volume declines of 73%, and emergency room visits were down 43%.

In the Wednesday note to bondholders, Sutter reported unaudited losses of $1.1 billion on revenue of $3.2 billion for the first quarter. It netted $394 million on revenue of $3.3 billion in the same period last year.

Sutter joins other large hospital networks such as the Mayo Clinic and Kaiser Permanente in reporting recent revenue losses related to COVID-19.

Yet the numbers for Sutter could get grimmer over the second quarter as revenue continues to sink. For April, it projects operating losses of $360 million and a negative operating margin of 50.5%, not counting congressional relief funds.

“Sutter anticipates in the near term at least a $300 million per month reduction in operating performance until containment of COVID-19,” it reported. It is also spending tens of millions of dollars to purchase equipment to confront a potential resurgence of COVID-19 this fall and winter — on top of some $57 million it has already spent to prepare for the pandemic.

As a result, Sutter says it has either cut the hours of about 5,000 of its employees, reassigned them or sent them for retraining.

While Sutter noted that California is slowly reopening the state after six weeks of shutdown, it remains to be seen whether patient flow will return to normal. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, warned this week that reopening too soon could lead to a spike in new coronavirus cases.

The funds Sutter has received from the Coronavirus Aid, Relief, and Economic Security Act have alleviated the financial pain to some extent. It has received $205 million to date, plus another $1 billion in accelerated Medicare claims payments from CMS. Factoring that in, Sutter says April operating losses would be cut to $168 million.

Sutter is also sitting on about $6 billion in cash and liquid investments, but notes it has lost $500 million from its portfolio since the start of the year. It has also borrowed $400 million from a $500 million credit line so far this year and obtained another $100 million credit line last month.