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$2 trillion stimulus package includes $100 billion request from hospitals

Many hospitals will not be able to survive the damage to their cash flow for longer than 60-90 days, report says.

Susan Morse, Managing Editor

Hospitals have gotten the $100 billion they requested in the $2 trillion stimulus package approved by Senate leaders early Wednesday morning.

The bill includes the creation of an emergency-fund grant program, additional support for taking care of COVID-19 patients and relief from spending cuts, among other provisions. 

The revamped Senate proposal is aimed at keeping the nation out of a recession because of the coronavirus crisis. It also includes tax rebates, four months' expanded unemployment benefits and other business tax-relief provisions, according to The Hill.

On Saturday, the CEOs of three hospitals said they were looking at not making payroll in a couple of weeks, and one said the system was in danger of closing due to the double hit of losing revenue from the loss of their bread-and-butter elective procedures while they also ramp up for a surge of coronavirus cases.

The American Hospital Association, the American Medical Association and the American Nurses Association called on Congress to provide hospitals with $100 billion, with some of the money going into an emergency stabilization fund for expenses related to COVID-19 and to help them meet payroll. They had previously asked for $1 billion.

The AHA said Wednesday that, while the bill includes important provisions that will help hospitals respond, more will need to be done to deal with the challenge of the virus, but it gave no specifics. The AHA said it supported the legislation and urged the Senate and House to act quickly to pass it.

WHY THIS MATTERS

New analysis of financial data from 127 U.S. hospitals shows the cost of treating COVID-19 patients, coupled with the loss of profitable elective procedures, will drive many hospitals to the brink of financial collapse. 

The three CEOs on Saturday's call with the American Hospital Association confirmed this.

J. Scott Graham, CEO of Three Rivers and North Valley Hospitals in hard-hit Washington State, said the system would have to think about closing in two weeks without an immediate influx of money to make payroll.

The analysis, by Strata Decision Technology, said hospitals would be operating in the red even if Congress gave them a 20% bump in payment for COVID-19 cases.

The cost for caring for COVID-19 patients is significantly higher than that of other patients due to the complexity of the illness.

According to the analysis, without an additional increase in Medicare funding, within 60 days a majority of hospitals would have little choice but to engage in massive layoffs of non-clinical staff to stay afloat financially. The worst-case scenario would result in 97% of health systems losing an average of $2,800 per COVID-19 case, with many losing between $8,000 and $10,000 per case.

Even with the proposed 20% increase in Medicare reimbursement for COVID-19 cases, the analysis shows there would be an average loss of about $1,200 per case and up to $6,000 to $8,000 per case for some hospital systems, depending on their payer mix.

THE LARGER TREND

Despite government promises of the release of personal protection equipment, healthcare workers continue to struggle to get enough face masks and other PPE and for ventilators for patients.

Costs are also being driven higher due to expanded cleaning regimens, more frequent X-rays and CT scans, and overall higher supply and drug costs.

Elective cases are the primary source of revenue for many hospitals, allowing them to take a loss on certain other services while remaining profitable. Researchers estimate that 90% of hospitals that cancel all elective procedures will shortly begin to experience negative profit margins from COVID-19 cases.

Many hospitals will not be able to survive the damage to their cash flow for longer than 60-90 days, the report said.

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com