Florida has been hit particularly hard by the COVID-19 pandemic, and AdventHealth, a 21-hospital health system headquartered in Altamonte Springs, is feeling the financial impact. According to the American Hospital Association, the system has lost close to $263 million since the start of the pandemic, and needs additional funding to offset those losses.
The healthcare system experienced a $172 million shortfall in April alone, and, while Todd Goodman, division CFO of AdventHealth's acute care and emergency facilities, said the system is grateful for the funds it has received as part of the Coronavirus Aid, Relief and Economic Security Act, more is needed to offset the significant losses.
The recent surge of COVID-19 cases in central Florida affects seven Florida counties especially: Orange, Seminole, Osceola, Polk, Volusia, Flagler and Lake. The counties are central to AdventHealth's Central Florida Division, which includes 21 hospitals and more than 30 urgent care centers, as well as hundreds of physicians, ranging from primary care to a full spectrum of specialties.
What that means for the system's financial future is uncertain, though according to Goodman, the current numbers in the region are four times higher than the peak in coronavirus cases central Florida saw back in April, prompting AdventHeath to bring in high-priced nurses and staff from other parts of the country.
WHAT'S THE IMPACT?
Initially, AdventHealth believed the COVID-19 spike would arrive in late April or early May. In making preparations for the virus, senior leaders realized that maintaining workforce levels throughout the crisis would be key. The system made a commitment to its staff that, even as volumes fell, people would not be laid off. With elective volumes all but evaporating over that time, that effort took significant resources.
The decline of elective surgeries and procedures has had a profound effect on AdventHealth. During the last two weeks of March, its Orlando facilities alone saw revenue shortfalls of $51 million.
Personal protective equipment was hard to find. AdventHealth purchased masks, gowns and other PPE from a variety of sources. It needed to procure extra warehouse space as the orders came in and outpaced the organization's usual storage area. The system partnered with the Orlando Magic and the city of Orlando to transform the Amway Center into a hub for healthcare equipment and supplies that the hospital system used to distribute materials to individual hospitals.
Doug Hilliard, CFO of eight hospitals in the tri-county area and for two hospitals in Polk County, told the AHA the system had to broker deals with outside suppliers, and paid three to 10 times above the normal baseline price for certain PPE items. That cost translated to about $254 million.
On July 17th, AdventHealth's COVID-19 hospitalizations were at a peak of 788 patients, five times higher than the previous peak that occurred a few months ago.
"These hospitals need additional funds to withstand the pandemic while also providing much-needed care to other patients suffering from heart attacks, heart failure, strokes and chronic conditions," the AHA said by statement. "There is a backlog in delivering medical services, even from April, as the hospitals struggle to expand space and staffing to meet the needs of their communities."
Goodman said higher staffing costs have resulted in a need for more federal funding.
THE LARGER TREND
In July, AHA president and CEO Rick Pollack, pulling from Kaufman Hall data, said the cancellation of elective surgeries is among the factors contributing to a likely industry-wide loss of $120 billion from July to December alone. When including data from earlier in the pandemic, the losses are expected to be in the vicinity of $323 billion, and half of the nation's hospitals are expected to be in the red by the end of the year.
This has amounted to a "double whammy" for hospitals, because on top of elective procedures being cancelled, the money healthcare facilities received from the CARES Act was an advance on future Medicare payments – which are coming due. While hospitals perform fewer procedures, they will now have to start paying that money back.