The Journal Gazette
Wednesday, July 15, 2020 1:00 am

Pandemic taking financial toll on hospital systems

SHERRY SLATER | The Journal Gazette

Parkview Health lost about $110 million from mid-March through the end of May, an example of hospitals' lack of immunity from COVID-19's financial effects.

Mike Packnett, Parkview's CEO, said Tuesday the nonprofit health care provider's cash reserves have kept the region's largest employer afloat and ensure it will be treating patients for years to come despite this pandemic and future challenges.

“We were built for crisis,” he said. “Those reserves help us to do that. Over the next few years, we'll be building those back up.”

The Indiana Hospital Association on Tuesday released data showing that member hospitals spent 8.3% more than they made in April, the most recent statewide statistics available. Hospitals serving rural areas experienced an even higher operating loss of 27.7%.

Several factors contributed to the situation. Hospitals spent more for supplies but slashed billing when they suspended elective procedures, the association said. Also, patients with non-COVID-19 conditions avoided seeking care, putting another dent in hospitals' income column.

Lutheran Health Network spokeswoman Kara Stevenson acknowledged that the coronavirus pandemic also affected northeast Indiana's second largest health care provider's balance sheet. She didn't provide numbers, however.

“We saw a significant impact when we stopped elective procedures in March but have seen more patients return since we began resuming some procedures in late April,” Stevenson said in an emailed statement. “We have remained nimble throughout, focusing on providing quality care to our patients and taking extraordinary measures to keep everyone safe.”

She added that Lutheran's hospitals are prepared to care for patients “today as well as those who will need us tomorrow.”

Between March and April, the Indiana Hospital Association said, inpatient volume fell 26% statewide. Emergency care declined by 40%, outpatient surgery was down 52% and outpatient services dropped by 46%, data shows.

Hospitals' expenses jumped, meanwhile, as they doubled intensive care capacity and ventilator availability. In at least one case, a hospital paid $7 per hospital-grade face mask, items that previously sold for 37 cents each. It wasn't unusual, the association said, for Indiana hospitals to pay at least 10 times the normal price for personal protective equipment.

The American Hospital Association has projected that hospitals and health care systems nationwide could lose more than $320 billion this year.

Parkview officials don't expect to return to break-even status through at least 2020.

Packnett said business bankruptcies resulting from the current economic recession will hurt Parkview in a couple of ways. Each employer that closes translates to former workers who won't have health insurance.

People without insurance often cancel routine appointments that help them manage chronic conditions and put off elective procedures, including knee and hip replacement surgery. Those visits are an important source of income for health care systems.

Also, when an emergency situation, such as intense chest pain, forces the uninsured to seek emergency care, they often can't pay, and Parkview ends up writing off the debt as charity care.

Packnett isn't venturing a guess on how long the recession will last and how many people will be thrown out of work. He's shortened his planning window from five years to 21/2 years because of the near-term uncertainty.

Indiana Hospital Association officials are concerned about members' finances but also that people are neglecting their long-term health.

Brian Tabor, the association's president, said studies show that patients have postponed care since March.

“We've heard many stories of people who wound up in the hospital, and in some cases, even the intensive care unit, because they did not get the preventative care they need,” he said in a statement. “It is important for Hoosiers to know that it's safe to seek care – far safer than waiting until their health has deteriorated.”

Lutheran's Stevenson echoed that concern.

“We continue to encourage the community to seek care when they need it, especially in emergency situations,” she said, “and to practice social distancing, masking and proper hand hygiene.”


Parkview, Anthem meeting on contract

Parkview Health officials are scheduled to meet today at the negotiation table with representatives from Anthem Blue Cross and Blue Shield.

“We have a significant gap to close in the next couple of weeks,” Parkview CEO Mike Packnett said Tuesday.

The existing contract, which was extended 90 days because of the coronavirus pandemic, expires July 28. If a new agreement isn't reached in the next two weeks, Parkview patients with Anthem insurance would find themselves suddenly paying more for care – or forced to switch providers as of July 29.

Each side has significant bargaining power. Parkview is northeast Indiana's largest health care provider and largest employer. Anthem has the largest membership among any health care insurer doing business in Indiana.

Anthem is pressuring Parkview to lower prices after a study found the local health care provider is the most expensive in the state.

Parkview officials have pushed back, saying the study's conclusions are flawed because the methodology was unfair. Comparing other data found in the same study, Parkview's prices were actually lower than those of Indiana University Health, they say.

About 250,000 people in northeast Indiana depend on Parkview for their Anthem-covered care, Packnett said.

“If there's any way to get the deal done, we will do it,” he said. “They may be Anthem members, but they are our patients.”

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