Ongoing pandemic causing financial stress for hospitals say experts

COVID and Hospital Finances
Health care worker pushes an unidentified patient into a facility.
Health care worker pushes an unidentified patient into a facility. (Source: WVUE)

NEW ORLEANS, La. (WVUE) -Hospitals remain on the frontlines as the COVID-19 pandemic persists and cases rise, and even as medical facilities fulfill their mission of treating patients and saving lives the health crisis is causing financial pain, according to experts who focus on the hospital industry.

Walter Lane, Ph.D., is a University of New Orleans healthcare economist.

“Well, at this point, the numbers that I’ve seen almost every hospital is running huge losses,” Lane said.

He pointed to reasons why hospitals are feeling more financial stress during the pandemic.

“For a long time, they couldn’t do the type of surgery, the elective surgeries where they make the most of their money. A second one is obviously their costs have gone up,” said Lane.

Add to that the people who have lost jobs and health coverage in recent months which increases uncompensated care for hospitals.

“So, the amount of uncompensated care has gone up dramatically, so that I think every hospital has been losing huge amounts of money,” said Lane.

Dr. Mark Diana is Chairman of the Department of Health Policy and Management at Tulane University’s School of Public Health.

“Hospitals themselves are struggling and this is another indication of our health care system’s inability to handle such a situation as this,” Diana said. “They’re providing acute care to very ill people in the pandemic, they’re heroic in those efforts, don’t misunderstand me, but they don’t make much money off of those, it’s the elective surgeries.”

Lane spoke of a hospital that hoped to make millions of dollars this year but that was before COVID hit. Now he said it is bracing to lose a significant amount of money.

“Looking at losing $13 million to $23 million in this year alone,” said Lane.

The novel coronavirus attacks the lungs and the Kaiser Family Foundation says based on an analysis of spending by large employer health plans for respiratory diagnoses, hospital costs could exceed $80,000 for patients with the most serious respiratory conditions that need ventilator support.

“When they go into the hospital they tend to stay a lot longer, well, Medicare pays hospitals on a per case basis, so if you’re in the hospital for five days or 10 days hospitals get the same amount of money,” said Lane.

Governor John Bel Edwards administration says hospitals received funding directly from the federal CARES Act due to the pandemic. However, the Louisiana Department of Health will have hospital expenses related to its partner hospitals around the state said an administration spokesman. Those hospitals would apply to the state for reimbursement of expenses just like all other state agencies impacted by COVID-19.

“Although the CARES Act has been generous, that [funding] looks like for the ones I know about may only cover about half of the losses,” said Lane about the federal help.

And he said small and rural hospitals are especially at risk for financial difficulty and it began long before the pandemic.

“The small hospitals are going to be in even worse shape and again they were already especially the rural hospitals were already mostly losing money to begin with. I’m very much afraid of fairly large numbers of bankruptcies coming up,” said Lane.

And the financial health of hospitals in general could depend heavily on how fast people return in large numbers to seeking non-emergency medical care and elective procedures.

“The normal volumes that they’ve had before and there’s some reason to believe, some people believe it won’t come back, that people are afraid to go to the hospital now, so the future is really pretty grim,” said Lane.

Diana thinks there is room for more discussion on paying for health care in America.

“And so we need to think about how we pay for health care and pay for hospital care in the United States, post-COVID-19, if other pandemics come along we’re going to be in the same situation,” said Diana.

FOX 8 was unsuccessful in its request for comment from LCMC Health which operates UMC New Orleans, Children’s Hospital, Touro Infirmary, New Orleans East Hospital and West Jefferson Medical Center, nor did the Ochsner Health System or East Jefferson Hospital provide comment for this story as requested.

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