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WHY ARE OUR HOSPITALS BLEEDING RED INK?
It does not seem to make sense: hospitals around the country have been deluged by very ill patients with COVID-19, around 100,000 of whom have died. At the same time, as the American Medical Association journal JAMA put it last month, the corona virus pandemic is threatening the financial viability of American hospitals and the jobs of health care workers.
By the end of April, 1.4 million jobs were lost in the US health care sector, according to the US Labor Department. About 60 percent of all hospital spending goes to labor costs. The health care job losses are a leading indicator of the financial damage pummeling hospitals.
As the Mississippi Senate Public Health Committee heard earlier this month, the University of Mississippi Medical Center alone is projecting a $150 million loss in revenues by the end of 2020. All Mississippi hospitals together could need an extra $320 to $360 million to remain financially stable, according to Tim Moore of the Mississippi Hospital Association.
The reasons for the financial crisis impacting American hospitals run from more patients without health insurance due to job loss, canceled elective surgeries and outpatient appointments because those patients needed to be protected from the corona virus, to the high cost of treating the very sickest COVID-19 patients.
The hospitals in the most financial trouble, in addition to those seeing high numbers of very sick COVID-19 patients like UMMC, are most likely to be the smaller rural hospitals who were already running on thin margins before the pandemic hit. JAMA reports that one in five US rural hospitals had financial problems significant enough to risk their closure in 2019.
The current and past reasons for why hospitals are at financial risk have to do with their funding. Hospitals talk about their Payer Mix of revenues from private insurance, Medicaid, Medicare, and patients without insurance or who are under insured. That last category produces very little revenue; none of the other sources pay the same. Medicare, though reliable, pays at a discount.
In states like Mississippi that did not expand Medicaid, there are a lot of low-income working people who can afford neither health insurance nor the hospital bill if they get sick. Medical expenses are still the number one reason all Americans file for bankruptcy.
As JAMA pointed out, even before the current pandemic small rural hospitals considered critical access hospitals were both more dependent on elective surgeries and outpatient services, and had a lower average bed occupancy rate than larger urban hospitals. People getting elective surgeries and outpatient services generally have good insurance, and those revenues helped keep hospitals solvent. COVID-19 wreaked havoc on the Payer Mix, causing these same hospitals to furlough health care workers and even close hospital services.
JAMA has three recommendations for protecting our hospitals and the US health care system’s ability to remain viable throughout this pandemic, and to be able to treat any new surge of COVID-19 patients in the fall.
JAMA recommends lump sum payments from Congress to hospitals to prepare for and respond to any new COVID-19 outbreak. Funds should be distributed to offset hospitals’ revenue losses due to the pandemic, and help pay the cost of patients without health insurance, including due to recent job loss from the shutdown. JAMA also recommends that federal funding formulas give extra weight and assistance to critical care hospitals and not to large hospital conglomerates with healthy revenues.
Another good recommendation is that furloughed health care workers be hired by the CDC and the National Institutes of Health and trained in disease testing and contact tracing to help minimize and stop the on-going spread of COVID-19 or any future pandemic disease.
Health care jobs have been a bright spot in Mississippi’s economy over the past few decades. The state has invested heavily in increasing the number of doctors and nurses and other health professionals who care for Mississippians from birth to old age. These professionals have been real heroes in this pandemic. Now is not the time to let their jobs disappear, just when we are counting on them the most.
-Lynn Evans is from Jackson
