The COVID-19 pandemic has left many U.S. providers facing potential financials losses for the year and feeling strained in their ability to afford and provide care for patients.
US hospitals feeling financial strain of coronavirus pandemic
March 23, 2020
by John R. Fischer, Senior Reporter
Hospitals across the U.S. are expecting heavy financial losses throughout 2020 due to the strain of the coronavirus pandemic on medical resources and services.
New York-Presbyterian Hospital — on the basis of a number of assumptions — estimates operating losses between $104 million and $454 million for the 2020 calendar year, reports Modern Healthcare. Meanwhile, rural medical facilities already facing financial strains in Kentucky are reported to have neither the financial nor the operational capacity to treat coronavirus patients, putting more strain on urban health systems to meet demand.
“Even if we do all these things that we’re trying to do, in terms of social distancing and closing the businesses and schools, many areas will still have need that exceeds capacity,” Ty Borders, the director of University of Kentucky’s Rural and Underserved Health Research Center, told local news outlet, The Herald-Leader. “On the one hand I think that Kentucky is doing more than many places to try to bend the incident curve that the federal government has referred to, That said, if there is an outbreak of severe cases, I don’t think any hospital is prepared, in Kentucky or elsewhere.”
The outbreak in the U.S. has led federal, state and local governments to pass a variety of relief packages to keep hospitals afloat as they face dwindling resources such as face masks and respirators, and a shortage in hospital beds.
The U.S. government has already passed two spending bills, with one including $2.2 billion to reimburse state or local costs for coronavirus response and preparedness activities and nearly $1 billion for the purchase of drugs and medical supplies, including masks and personal protective equipment, according to the Hospital Health System Association of Pennsylvania.
Similarly, state legislatures in California allocated up to $1 billion to increase supplies of ventilators and respirators, reported CalMatters.
Still, providers expect to incur great losses, already losing revenue to mandated cancellations in elective surgeries. New York-Presbyterian Hospital estimates a negative impact on operations of between $350 million and $700 million in its unconsolidated 2020 financial statements, brought on by a number of potential scenarios, including no assistance from the government or any insurance recoveries.
“Financial markets have experienced unprecedented turbulence in the last two weeks, attributable to: (i) the potential impact of COVID-19 on world economies; (ii) oil prices; and (iii) the possibility of an economic recession in the United States,” said the NYC health system in a voluntary disclosure letter. “This may affect the returns on the Guarantor’s [New York-Presbyterian Hospital] investments and therefore, it is possible that the Guarantor will experience lower returns than the returns reflected in its recent financial statements.”
In addition, six of Vermont’s 14 hospitals previously reported last summer that they expected a deficit by the end of the 2020 fiscal year. These concerns have only inflated with the spread of the virus to the point where Green Mountain Care Board, which regulates the state’s hospital budgets, is postponing finalization of its budget framework for the next fiscal year, according to Vermont Public Radio.
“They're looking at losses of about a million dollars a week — is their projections through this,” Franklin County Sen. Corey Parent told VPR in reference to one hospital, Northwestern Medical Center. “I'm sure UVM Medical Center and some other hospitals would see larger [losses]. Are we looking at how we're going to support them and keep the doors open through this?”
The Herald-Leader reports that rural health systems in Kentucky face severe disadvantages due to many areas lacking ICU beds for severe cases and limited information about the capacity of Kentucky’s rural hospitals.
“We need better information and statistics from the Kentucky Hospital Association, as an example, and the Kentucky Office of Rural Health about the capacity of these rural hospitals and clinics to really handle these issues,” said Borders. “It’s not as if we have a lot of great information about the urban hospital capacity, but we have even less information about rural hospitals and health care systems.”
New York-Presbyterian Hospital — on the basis of a number of assumptions — estimates operating losses between $104 million and $454 million for the 2020 calendar year, reports Modern Healthcare. Meanwhile, rural medical facilities already facing financial strains in Kentucky are reported to have neither the financial nor the operational capacity to treat coronavirus patients, putting more strain on urban health systems to meet demand.
“Even if we do all these things that we’re trying to do, in terms of social distancing and closing the businesses and schools, many areas will still have need that exceeds capacity,” Ty Borders, the director of University of Kentucky’s Rural and Underserved Health Research Center, told local news outlet, The Herald-Leader. “On the one hand I think that Kentucky is doing more than many places to try to bend the incident curve that the federal government has referred to, That said, if there is an outbreak of severe cases, I don’t think any hospital is prepared, in Kentucky or elsewhere.”
The outbreak in the U.S. has led federal, state and local governments to pass a variety of relief packages to keep hospitals afloat as they face dwindling resources such as face masks and respirators, and a shortage in hospital beds.
The U.S. government has already passed two spending bills, with one including $2.2 billion to reimburse state or local costs for coronavirus response and preparedness activities and nearly $1 billion for the purchase of drugs and medical supplies, including masks and personal protective equipment, according to the Hospital Health System Association of Pennsylvania.
Similarly, state legislatures in California allocated up to $1 billion to increase supplies of ventilators and respirators, reported CalMatters.
Still, providers expect to incur great losses, already losing revenue to mandated cancellations in elective surgeries. New York-Presbyterian Hospital estimates a negative impact on operations of between $350 million and $700 million in its unconsolidated 2020 financial statements, brought on by a number of potential scenarios, including no assistance from the government or any insurance recoveries.
“Financial markets have experienced unprecedented turbulence in the last two weeks, attributable to: (i) the potential impact of COVID-19 on world economies; (ii) oil prices; and (iii) the possibility of an economic recession in the United States,” said the NYC health system in a voluntary disclosure letter. “This may affect the returns on the Guarantor’s [New York-Presbyterian Hospital] investments and therefore, it is possible that the Guarantor will experience lower returns than the returns reflected in its recent financial statements.”
In addition, six of Vermont’s 14 hospitals previously reported last summer that they expected a deficit by the end of the 2020 fiscal year. These concerns have only inflated with the spread of the virus to the point where Green Mountain Care Board, which regulates the state’s hospital budgets, is postponing finalization of its budget framework for the next fiscal year, according to Vermont Public Radio.
“They're looking at losses of about a million dollars a week — is their projections through this,” Franklin County Sen. Corey Parent told VPR in reference to one hospital, Northwestern Medical Center. “I'm sure UVM Medical Center and some other hospitals would see larger [losses]. Are we looking at how we're going to support them and keep the doors open through this?”
The Herald-Leader reports that rural health systems in Kentucky face severe disadvantages due to many areas lacking ICU beds for severe cases and limited information about the capacity of Kentucky’s rural hospitals.
“We need better information and statistics from the Kentucky Hospital Association, as an example, and the Kentucky Office of Rural Health about the capacity of these rural hospitals and clinics to really handle these issues,” said Borders. “It’s not as if we have a lot of great information about the urban hospital capacity, but we have even less information about rural hospitals and health care systems.”