Jennifer Kreidler-Moss has no shortage of concerns to occupy her.
When schools hosting Peninsula Community Health Services sites shut down, her organization lost touch points to schoolchildren, including some struggling with mental health or at risk of suicide.
“I’m beside myself with worry,” said Kreidler-Moss, the nonprofit’s CEO.
And since COVID-19 began, 17% of the staff has been laid off or furloughed and March revenues fell $884,000 short of expectations.
At EvergreenHealth Medical Center, the first U.S. hospital system to identify a COVID-19 outbreak, March revenue was $20 million less than projected. The hospital system spent an unplanned $3 million on personal protective equipment, testing and screening, among other costs.
In the fight against COVID-19, health care systems have canceled surgeries, shuttered some primary care offices, created COVID-19 wards and left dental chairs empty to prevent the virus’s spread. And as asked, many patients heeded officials’ pleas and stayed home.
But now, as rates of new COVID-19 cases and deaths trend lower, some experts and health administrators say the measures that helped avoid the pandemic’s deluge are barreling health systems toward a second crisis: a flood of red ink.
“We’re bleeding money and people are cooped up in their homes, but it seems to be working,” said Chelene Whiteaker, senior vice president of government affairs for the Washington State Hospital Association.
Altogether, hospitals’ budget shortfalls could swell to $900 million for March and April in the state, Whiteaker said. Federal funds are supposed to put these institutions on more stable financial footing, but Whiteaker said it’s not likely enough.
The financial blows to health care systems are myriad, said Bob Malte, a clinical associate professor of health services at the University of Washington.
Patient volumes and revenues have fallen as patients stay home, Malte said. Costs are flat or have risen with COVID-19.
The mixture of patients seeking services is changing, too, said Malte, a former hospital executive including at EvergreenHealth. For some hospitals, that could mean an increasing number of Medicaid or Medicare patients, who are less lucrative to the bottom line than commercial payers.
Medical centers’ reserves also have taken a hit.
“Investment portfolios have been decimated,” Malte said.
Malte said he worried most for hospitals in rural areas that often don’t have hearty reserves, hospitals in areas experiencing inequality because of race or wealth, and hospitals with a higher proportion of patients on Medicare or Medicaid.
“COVID is underscoring we have a lot of inequities in our health care delivery system,” Malte said.
Few institutions will remain unshaken, he said.
“I worry about them all.”
March was bad for finances at EvergreenHealth Medical Center in Kirkland. April is expected to have been worse.
EvergreenHealth planned to take in about $780 million in total operating revenue this year, said Chief Financial Officer Tina Mycroft. April is expected to tally up to $20 million to $35 million short of monthly expectations.
“Things are very fluid,” Mycroft said.
Emergency room visits have dropped by about 60% and procedures by 73%, said Chief Executive Officer Jeff Tomlin.
Meanwhile, costs rose about $3 million in March alone as EvergreenHealth invested in personal protective equipment, drive-thru testing, screening and extra staffing for COVID-19.
Mycroft said the hospital has cut planned capital expenditures in half for 2020, already instituted voluntary furloughs for some staffers, and sidelined others for lack of work.
EvergreeenHealth has about 100 days of reserves, Mycroft said. Hospital leaders are looking to dip into that money, seek more federal funds and try to establish a line of credit.
“We expect this recovery to be two years, maybe longer,” Mycroft said.
Uncertainty further clouds planning.
How soon will patients feel comfortable returning for routine care? How many patients are now dealing with more emergent conditions because they went without that care? Will the virus that causes COVID-19 produce another wave of rapid growth?
Gov. Jay Inslee on Wednesday took steps to allow more medical procedures, which could help boost revenue.
But Tomlin said it won’t be like turning on a spigot.
“It’s going to be gradual,” he said.
Most at risk
Community health centers, which serve vulnerable communities regardless of patients’ ability to pay, could be among the institutions most at risk. These centers often rely on reimbursement from Washington state’s Medicaid program, and also care for the uninsured or underinsured.
An economic analysis released last month of Washington’s 27 community health centers by the accounting firm CliftonLarsonAllen estimated that together they could lose about 59% of revenues because of COVID-19 over six months’ time, a combined loss of about $473 million dollars.
The analysis relied on financial information provided by most centers through February, and assumed that a plunge in patient volume would last through summer’s end, but did not consider cost-cutting measures the centers could take, according to Kyla Delgado and Matthew Borchardt, the certified public accountants who performed the analysis.
In that scenario, the analysis found more than 8,000 full-time jobs could be lost across the state’s community health centers, more than 600,000 patients could lose a provider and 167 clinical sites could be shuttered.
“People aren’t coming in for care,” said Bob Marsalli, CEO for the Washington Association for Community Health. “You’re getting into those scarce reserves to keep the lights on.”
At Columbia Valley Community Health, which serves Chelan and Douglas counties, visits for dental procedures have dropped by about 95%, said David Olson, the system’s CEO. Routine dental services were halted to preserve protective equipment and avoid spreading the virus.
The community health center, which employs about 300 people and sees about 140,000 patient visits each year, also saw medical visits drop by about half.
Founded nearly 50 years ago to treat migrant farm workers, Olson said the health center is on the front lines of care to essential agricultural workers who often live in close quarters, could be susceptible to COVID-19 and don’t have many options for health care. An outbreak was recently identified in agricultural housing near East Wenatchee.
Olson said North Central Washington hasn’t seen the end of COVID-19.
“We’re right at that time of year when people are coming in. They’re getting ready to go out and plant fruit trees and farm,” Olson said. “It’s economics here, but we’re talking about feeding a whole lot of people that don’t live in Chelan and Douglas counties.”
Olson said the health center, which was growing before the pandemic, might need to forgo planned construction of a new clinic to keep paying staff.
In the Seattle area, Neighborcare Health CEO Michael Erikson said the organization’s monthly revenue had fallen by about 35%. Neighborcare offers 16 clinic locations.
“Primary care for us is medical, dental and behavioral health. Each of those areas was hit with a torpedo,” Erikson said.
Erikson said Neighborcare has established a tent for COVID-19 testing, kept three dental sites open for emergency procedures and converted about 75% of behavioral health and medical visits to telehealth.
Still, the organization’s shortfall totaled $1.3 million for March and an expected $2.5 million in April.
About 30% of Neighborcare’s 700-person staff is furloughed or on standby status, Erikson said.
“We’re looking for the bottom,” he said. “If we can find that floor in the next six to eight weeks, we can begin to climb our way out.”
Marsalli said the association for community health was appealing to federal and state officials for financial relief and also asking the state to immediately release some Medicaid funds usually contingent on quality measures.
Grim bottom lines
The statistics are grim for financial bottom lines.
Harvard researchers, in partnership with a health care data company, found that ambulatory visits dropped nearly 60% in March and held low into early April for Pacific Coast states. Telehealth only offset a small portion of visits.
About 20% of primary care physicians surveyed nationwide in mid-April by the Primary Care Collaborative predicted they would be forced to close in a month’s time because they lacked staff, cash or patients.
Federal coronavirus relief programs have provided some relief, and Congress has approved more CARES Act funding than has been distributed. Still, what’s available now is not expected to make up for health centers’ lost revenue.
“This pales in comparison,” said Leemore Dafny, a professor of business administration at Harvard University who studies health care.
So far, EvergreenHealth said it has received two payments of CARES Act funds, totaling $13.6 million, and well short of its March losses alone.
The first $30 billion of CARES Act funding was distributed based on health care centers’ Medicare billings. Other awards are aimed at rural areas, places hard-hit by COVID-19 and for Indian health services.
How the money is allocated has been the subject of contention.
Using Medicare as a basis leaves children’s hospitals out, said Jacqueline Barton True of the state hospital association. Washington state also is “more efficient” than states like Florida in Medicare spending, Barton True said, yielding a smaller proportion of federal funding.
Targeting areas hard-hit by COVID-19 makes sense, but Whiteaker noted that Washington “is not overwhelmed because we took early measures” that caused financial pain.
“We’ve been feeling the financial pain longer,” she said.
No matter how the money is doled out, Dafny said there will be plenty to bicker about.
“The costs of this are going to be borne unevenly,” she said, but the national conversation is not about fairness, but how to keep vulnerable institutions open.
Community Health Centers say they need more help.
Neighborcare in Seattle received nearly $2.1 million through the CARES Act, “about one month’s worth of the loss we’ve been experiencing,” Erikson said.
Columbia Valley Community Health got more than about $1.2 million — the equivalent of about two weeks’ payroll, Olson said. Peninsula Community Health Services received almost $1.1 million.
Kreidler-Moss said Peninsula also applied for a federal payroll protection program loan, received a loan Wednesday and will try to bring some staffers back.
More than 21% of Peninsula patients are experiencing homelessness. Without more support, “the safety net is going to collapse,” Kreidler-Moss said, adding that clinicians were concerned about delayed care and reported seeing more signs of stroke and heart issues in recent weeks.
Jill Horwitz, a health policy expert and professor at the UCLA School of Law, said COVID-19’s economic fallout will leave many without insurance and unable to pay for care. Hospitals and community health centers could absorb more costs.
“We had a decade of reducing health care benefits and shifting toward out-of-pocket costs, but if there’s nothing in the pocket, the providers of last resort are going to have a tsunami of patients,” Horwitz said.
Erikson said safety net providers will be more important during the expected downturn.
And after months of patients withdrawing from care,“What’s building is a wave of health care needs that could crash the system,” he said.