Even with major spikes in patients volume that have overwhelmed emergency departments and filled hospitals nationwide to capacity, severe flu season will actually create financial strain for hospitals despite the increased admissions, according to a new report from Moody's.
Hospital costs are expected to spike thanks to lower reimbursement rates that often don't cover the cost of flu treatment as well as higher risk of complications, making it tougher to implement cost management strategies. The severity of this year's flu will hamper efforts to minimize length of hospital stays.
Usually, most flu-related admissions are for Medicare beneficiaries and hospitals generally receive one payment to cover all the costs of a patient's flu-related admission. That payment varies according to institution and case-specific factors such as how many diagnoses are billed, the region's wage index, and whether or not the hospital is a teaching hospital. Since that payment must cover all the costs of care while the patient is hospitalized, the cost usually outweighs reimbursement after the patient has been hospitalized for more than a few days. Generally speaking, hospitalizations greater than three days will generally result in costs exceeding reimbursement, Moody's said.
Flu patients are often at risk for complications, and if needed, are treated in the intensive care unit which is costly, and Medicare does not reimburse for complications related to hospital acquired infections. Also, because many flu-related admissions are often unplanned and primary care physicians can be scarce, many flu patients present at the emergency department.
"Treating large numbers of patients in the ED creates a bottleneck to efficient flow of patients through the hospital and is often an expensive place to receive care," the report said.
Hospitals will also other like overtime and other unbudgeted staffing costs. Demand for additional staffing could limit facility capacity for elective and other procedures that generate valuable revenue. Hospitals could also see brief shortages of drugs and supplies as volume surges can create short-term capacity constraints requiring hospitals to open units that are typically unused. In certain markets, hospitals have set up temporary EDs to handle the volume, another additional cost.
Many hospitals have implemented stricter visitor guidelines to help prevent the spread of the flu, often barring patients who are younger than 16. Many hospitals have reported being overwhelmed, with patients being treated in hallways and in makeshift tents outside their emergency departments. Such was the case with at least one hospital in California, where the flu has taken an unusually firm hold. The shortages of IV saline bags due to stalled production in Puerto Rico has added another challenges, as flu patients often experience nausea and need intravenous hydration. While the FDA recently reported that all manufacturing facilities in Puerto Rico are back on the commercial power grid, production is a long way from full capacity.