Colorado hospitals will see a $4.1 billion drop in revenue this year thanks to COVID-19, according to projections from the Colorado Hospital Association.
The decline in elective procedures at hospitals statewide has already accounted for about $1.2 billion of that lost income, said Cara Welch, CHA director of communications.
Colorado Springs’ two major health systems measure the impact of the pandemic on their revenue in hundreds of millions of dollars.
At UCHealth, systemwide revenue in March and April plunged by $170 million, compared to average revenue, spokesperson Dan Weaver said.
Centura Health’s revenue across its 17 hospitals decreased by about $150 million year over year for the peak months of the pandemic through the end of May, Executive Vice President and Chief Operating Officer Edward Sim said.
The full impact of the pandemic on hospitals’ revenue depends upon what happens in the next several months, but hospitals likely will be affected for the foreseeable future — until patient numbers rebuild and the nation finds its way past the current health crisis.
“It is going to be a real challenge in the months or even years to come,” Welch said.
FEWER VISITS, HIGHER COSTS
Hospital revenues have been taking a significant hit since late March, when Gov. Jared Polis ordered a pause on elective procedures, Welch said.
“We have also seen, because of the stay-at-home order — and even now with safer-at-home — that many people are avoiding hospital care even when it’s needed,” she said.
“We’ve seen a drop in emergency department visits and people putting off preventive care.”
At the height of the pandemic so far, emergency departments were seeing about 40 percent fewer patients, she said. And along with decreased revenue, hospitals are seeing increased expenses.
“Hospitals are working to add capacity,” Welch said. “They’ve been adding ICU beds or negative pressure rooms for COVID patients, and some are continuing to hold that space in case we have a future surge. That’s expensive.”
Price gouging and competitive bidding for personal protective equipment have also resulted in higher costs for hospitals.
The federal government has been seeking to help with some of the revenue problems hospitals are facing. Colorado hospitals will receive a little over $1 billion in federal funding through the CARES Act and subsequent legislation, Welch said, and to date have received more than $700 million.
Congress also provided additional funding to increase Medicare payments for COVID-19 patients, Welch said. CHA estimated that Medicare is now covering 84 cents on the dollar for COVID-19 hospitalizations, up from 70 cents before COVID-19.
“But still, hospitals will be losing money on every Medicare patient that they care for,” Welch said. Medicaid pays about 77 cents on the dollar for treatment of all medical conditions, also below the cost of care.
“With these economic conditions, so many people have lost their employer-sponsored insurance,” she said. “We’ve seen numbers that 530,000 Coloradans may be going onto Medicaid in the coming months. That will be a long-term negative impact on hospitals.”
Some federal legislation has required insurers to cover the cost of COVID-19 testing and some diagnostic tools, but “covering the cost of care is still kind of nebulous or undecided,” Welch said. Some insurance companies are waiving cost-sharing requirements for their members, while others are not.
“There’s so much that the hospitals are trying to be prepared for and plan for that’s just really unknown,” Welch said. “It’s incredibly difficult for the financial picture to just keep going without a real idea of what that future is going to look like.”
For UCHealth, which consists of 12 hospitals and hundreds of clinics throughout the state, much of the $170 million in losses across March and April came from canceled and postponed surgeries and procedures.
Weaver was unable to separate out revenue and expenses for Colorado Springs facilities but said expenses throughout the system surged by $15 million in March, as UCHealth retrofitted some of its ICUs, expanded space for COVID-19 patients and worked to acquire additional equipment such as ventilators and personal protective equipment.
Patients who have a severe COVID-19 infection may spend up to 14 days in the hospital.
“They’re often on ventilators and they might spend a significant amount of time in the ICU, which does drive up costs,” Weaver said.
UCHealth’s 40 percent decline in emergency department visits aligns with the state average, and the system has also seen visits to its urgent care locations drop by 50 percent.
“We were finding out that they had delayed their medical care and postponed coming in for care by days sometimes, which was making their medical conditions, at times, far worse,” Weaver said.
The overall impact of delayed visits on revenue is less than the effect of delayed hospital admissions — but still a concern, he said. More concerning are the consequences of postponing care.
“We don’t want patients who might be experiencing an urgent or an emergency medical condition to postpone or delay their medical care,” Weaver said. “We’re encouraging patients who experience any kind of medical condition … to get their medical needs addressed. We have virtual urgent care and virtual visit options … so they can talk to a provider and get more information about whether they need to visit a physical location. In many cases, our providers are able to take care of them virtually.”
Some patients have expressed concerns about the cost of COVID-19 hospitalization.
Because of ongoing changes in coverage by Medicare and private insurers, “we’ve been holding the bills as we work with the payers as they adjust their policies on what they’ll cover,” Weaver said. “We encourage patients to reach out to us if they’ve got questions.”
For employees who provided services that were reduced or halted earlier this spring, UCHealth guaranteed their pay during that period and now has brought back many staff members.
“All of our clinics are scheduling their employees according to the volume that they’re seeing, which is pretty typical of the way they usually schedule,” Weaver said.
UCHealth is asking full-time, salaried employees to take eight days of paid time off this summer.
“Not only do our employees probably need some of that time off, but that’ll also help us reduce expenses,” he said. “That’s carried as a financial liability on our books.”
UCHealth has received about $97 million in CARES Act funding.
“Additional funding is still unknown, or exactly how much money might come to hospitals in the future,” Weaver said.
Patient volumes are improving but remain down, “and we’re expecting volume and revenue to remain down through the rest of the year,” he said. “While we’re certainly looking at and concerned about the overall financial implication, our focus still remains making sure that our patients as well as our employees are taken care of.”
Centura has seen a significant and troubling drop in revenue at its 15 hospitals in Colorado and two hospitals in Kansas.
Inpatient surgeries are currently at 70 percent of pre-COVID levels, Sim said, while outpatient procedures are at about 80 percent. Emergency visits have dropped to about 65 percent of what Centura’s facilities were seeing before COVID-19.
“While the numbers are big, what really concerns me is that countless people were not getting the care they need,” Sim said. “Sick patients get sicker and care gets more expensive the longer you avoid care.
“There was what I would call a pandemic of fear,” he said. “So I’ve told people who have asked me that if I needed to go into a facility for treatment, I would not hesitate to do so — that it’s a safe environment for the provision of care. We have clinicians who are singularly concerned with the safety of our patients, their family members and our caregivers. That is of utmost importance to us.”
Nonemergent patients are required to get temperature checks for up to 10 days in advance of their procedures and a COVID-19 test two days before they are admitted, he said.
“We have the supplies, we have the staff, we have the beds, and we have the medications to treat our patients, and we are very comfortable that we have adequate supplies of all those,” he said.
Sim said the managed care organizations with which Centura works have tried to make it easier for patients to get care by eliminating prehospitalization authorizations. Reimbursement in some cases has been faster, and payers have enhanced or started reimbursing for telehealth visits.
“In our system, we were doing maybe 50 to 60 telehealth visits a week,” Sim said. “Now we are doing up to 6,000 a week. We may not stay at that level forever, but it’s provided another venue for patients to receive timely care.”
Centura also received $97 million in federal grants.
“That sounds like a massive number,” he said, “but that’s only equivalent to about 10 days of operating expenses for our health system.”
The system also received $264 million in Medicare advance payments.
“That’s six months of our typical payments for Medicare,” Sim said. “They enacted this to help facilities in their time of need, … but we’re going to have to pay that back.”
Centura has not laid off or furloughed anyone because of COVID-19 and has provided extra benefits including a free hot meal per person on each shift.
“We offer a grocery store where we have supplies available at below cost,” Sim said. “A lot of our nurses work 7 to 7, and they would go into grocery stores and the shelves would be picked clean or they would be closed. We have gone out of our way to help our associates, because they’re the ones taking care of patients.”
Centura is still billing patients for clinical services, but “we have a fair number of people who cannot afford the treatments that they are receiving,” Sim said. “As part of our mission, we are taking care of those people. And we will always take care of those people.”