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May
7

Watch those facility costs…

As the coronavirus continues its relentless march, hospitals and health systems are getting crushed. With elective procedures banned in many states, the profitable patients hospitals relied on to generate profits have disappeared. Meanwhile, expenses related to preparing for COVID19 patients have gone thru the roof and so no signs of abating.

Florida is especially hard hit:

A new report by the national consulting firm Crowe shows Florida health systems have suffered nearly a 50% drop in patient volume in March and April.

Hospital owner UHS just withdrew its financial guidance, with management citing concern over the “financial uncertainty caused by the coronavirus disease.” The announcement followed similar moves by  hospital giant HCA, and Maryland’s hospitals are projecting a billion dollar revenue shortfall for the second quarter. Hospitals in Colorado are facing an even larger reduction in revenues and Michigan hospitals are laying off workers, 

“Patient volumes at our acute care hospitals and our behavioral health care facilities were significantly reduced during the second half of March as various COVID-19 policies were implemented by our facilities and federal and state governments. These significant reductions to patient volumes experienced at our facilities have continued into April, 2020.”

The billions sent to hospitals under the CARES Act is no panacea; on average the funds cover less than a week’s revenue.

Implications

More than a dozen rural hospitals  in the South closed last year.  We can expect more in 2020.

Hospitals and healthcare systems are drastically ramping up their “revenue maximization” efforts. Workers’ comp payers, long seen as hugely profitable, now have an even bigger and brighter target on their chests.

What does this mean for you?

Watch those facility costs. 

 


One thought on “Watch those facility costs…”

  1. I have not as yet seen an analysis of what this huge drop in healthcare implies about the necessity of care.

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Joe Paduda is the principal of Health Strategy Associates

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A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.

 

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