CEO Message

The Long Fight for Financial Relief

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Late last month, the respected health care financial analyst Kaufman Hall released its latest examination of the condition of hospitals as the nation continues to toil through the COVID-19 pandemic. Among the conclusions is something hospital leaders know all too well. From the report:

“As many push for a rapid return to ‘normal,’ hospital and health system leaders face a hard reality that there may never be a return to the old normal. The pandemic likely will have long-lasting repercussions on patient behavior, volumes, and the role of telehealth in an evolving healthcare landscape.”

Specifically, the report calls attention to several factors likely to influence hospitals’ ability to provide care in the same manner as prior to the pandemic, including:

  • COVID-19 continues to pummel operating margins. January-February 2021 operating margins without CARES relief are 4.2 percentage points lower than the same period in 2020. Even adding CARES relief, margins are still 3.3 percentage points lower.
  • Reduced volume coupled with sicker patients means greater challenges. January-February 2021 volume is down from the same period last year (17% decrease in discharges, 13% decrease in operating room minutes, and 26% decrease in ED visits). At the same time, patients are sicker, with the average length of stay spiking 8.5%. With high fixed costs and increases in the cost of labor expenses (a 25.4% jump) and medications (a 32.5% jump), hospitals are expending resources faster than they are recouping these costs.

With this as a backdrop, the press for financial relief continues on all fronts. This includes the current efforts to support a federal extension of the delay in Medicare sequestration cuts, a request for additional relief for hot spots during the winter surge, a push for disaster response loan forgiveness at the federal level, relief from the state seismic mandate to support disaster readiness modernization, and investigations of what additional relief may be available at the county and state level.

The fight to restore health care in the wake of the pandemic, and to build an even stronger version of our care delivery system, will be a long endeavor, well after the crisis subsides and widespread immunity is achieved. But that work is made up of what all of us do daily to carry forth the message that hospitals are not eternal, that hospitals are not indestructible, and that without help, the community institutions on which we all rely will continue to erode.

~ Carmela