Between the first and last weeks of March, the nonprofit that runs Providence Sacred Heart Medical Center watched its revenues fall off a cliff.
Elective procedures were shut down by the governor’s pandemic shutdown order, even as challenges of preparing for COVID-19 intensified. Some patients who could have sought and received care, even under that order, likely stayed away as well.
The revenues of Providence Health Care – which operates Sacred Heart and Holy Family hospitals – dropped by 41%, according to PHC’s chief financial officer, Shelby Stokoe. Sacred Heart has already been in a financial fight for its life, trying to turn around several years of losses.
“It was pretty quick and pretty drastic,” Stokoe said in an interview in late May.
The same thing happened at MultiCare’s Deaconess and Valley hospitals, and at clinics and other health care facilities across the state and nation.
The virus threatening the health of the population is also threatening the health care system. In Spokane – where a large part of our population relies on government health insurance and a large part of our workforce is employed in health care – that means a lot of added pressure on hospitals that have already been losing money.
Both Providence and not-for-profit MultiCare facilities have implemented worker furloughs and taken other cost-cutting to offset losses that already reach into the hundreds of millions across the region.
The American Hospital Association says the total costs to the nation’s hospitals will be more than $202 billion. The Congressional Budget Office estimates that up to half of all American hospitals will still be carrying a negative balance related to the crisis five years from now.
“Hospitals and health systems face catastrophic financial challenges in light of the COVID-19 epidemic,” the AHA said in a report.
The federal government has begun funneling billions of dollars in relief to hospitals through the Coronavirus Aid, Relief, and Economic Security Act, or CARES, Act. It’s a lot, but as with many of the relief efforts, the size of the need dwarfs the assistance so far, hospital officials say.
Providence Health Care, for example, received $36 million in CARES Act funding in May.
“That represents just about one week of patient revenue” in normal times, Stokoe said. “It didn’t make us whole, so to speak, but it was helpful in supporting the business continuing.”
‘Impact was huge’
MultiCare, which operates eight hospitals in Washington, did not answer requests to provide an overall picture of its CARES funding and recent financial circumstances.
According to the COVID Stimulus Watch, a project of Good Jobs First policy group, MultiCare received at least $46 million in stimulus funds last month, across its system. Officials said the relief funds were going into the overall MultiCare system, and they could not break down how much went into Spokane’s facilities specifically.
“The impact on our entire system was huge,” said Michael Myint, physician executive of population health for MultiCare.
A month ago, MultiCare furloughed 6,000 workers statewide, with about 350 workers affected here. The furloughs involved forgoing 17 shifts of work, and were directed as much as possible toward positions not directly involved in patient care. The organization was already seeing losses of more than $160 million at that point.
As part of the CARES Act funding directed toward health care providers, other clinics and facilities have received help as well, according to the COVID Stimulus Tracker. Cancer Care Northwest received $3.1 million, the Spokane Eye clinic got $2.1 million, Arthritis Northwest received $1.1 million and others received relief funding as well.
All told, the Department of Health and Human Services has handed out more than $72 billion, with plans for $100 billion more.
The New York Times reported last month that a large proportion of the aid has gone to large, multi-billion-dollar hospital chains with deep financial reserves rather than smaller hospitals that serve primarily low-income populations and that operate on much thinner margins.
Its chief example was Providence St. Joseph Health, the Seattle-based parent of Eastern Washington’s PHC, which received more than a half-billion in government funds. Though nonprofit, Providence has $12 billion in cash reserves and operates large investment funds.
The Times reported that 20 large hospital systems with total reserves of $108 billion received more than $5 billion in government assistance.
An analysis by the Kaiser Family Foundation found that the U.S. Department of Health and Human Services formula for disbursement directed more than twice as much money per bed toward hospitals that had the highest percentage of patients who are privately insured, compared to those with the fewest.
That has led to criticism that the hospital relief – as with other forms of coronavirus aid – has skewed away from those who need it most.
However, that picture doesn’t align very closely to the reality of hospital health care in Spokane.
A mission, a cost
Spokane’s hospitals all treat a patient population that relies heavily on government insurance, and both Providence and MultiCare have set institutional priorities to care for low-income patients. For both systems, that represents a challenge to the bottom line.
Private insurance, on average, reimburses hospitals at double the rate of government insurance, according to a Kaiser Family Foundation survey.
At Sacred Heart, which has lost more than $100 million over the past three-plus years, 70% of revenues come from Medicaid and Medicare patients. By contrast, at Seattle’s Swedish Medical Center, also a Providence hospital, more than half of the patients are privately insured and the hospital operates in the black, according to reporting by The Spokesman-Review’s Arielle Dreher.
Stokoe said an advantage of having a large, financially sound parent organization is to support it through times such these. It’s part of how Providence Health Care is able to meet its mission to serve the low-income population, she said.
“The Medicare and Medicaid population are near and dear to our hearts,” she said.
She also noted, relative to the Times piece, that Providence overall has received 0.8% of HHS funding, while it has 1.3% of the country’s hospitals.
Myint, the MultiCare executive, said that more than half of the patients treated in its system are insured by Medicaid or Medicare.
The region, with its high proportion of residents living below or not much above the poverty line, has always had a lot of government-insured patients. The continuing economic fallout from the pandemic, with joblessness soaring and long-term financial effects forecast, is likely to increase that proportion even more.
A slow return
Hospitals, meanwhile, are beginning to return to elective procedures, though there is some lack of certainty about the guidelines issued by Gov. Jay Inslee – which generally allow procedures to resume when health care providers feel it would be damaging to a patient’s health to wait.
Myint, who is also an infectious disease specialist, said that as hospitals begin returning to something like normalcy, they will have to adjust – though maybe not as dramatically as other sectors of society. Hospitals already have, for example, procedures for dealing with infectious diseases, some of which, such as measles, are even more easily spread than coronavirus.
“We’re always washing out hands, always cleaning our environments, always wearing masks and encouraging our patients to wear masks if they’re sick or have colds,” he said.
Hospitals will now be screening people for the virus and expanding the use of protective gear, among other measures. Universal masking has been implemented statewide.
“It’s really an extension of what we have historically done to ensure our patients, staff and their visitors are safe,” Myint said.
In terms of both public health and hospital finances, this remains an uncertain time. Myint said that, while it feels to some like we’re coming to the end of the pandemic, we are still very much in a long, unpredictable middle, with unexpected developments still appearing.
“We’re in the midst of this, and there’s always the risk of a surge in the fall,” he said.
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