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Hospitals on Life Support

You’d think a global pandemic would be a boon for health systems. But while COVID beds are full, other patients are staying home.

Illustration by Daniel Fishel
Illustration: Daniel Fishel

On March 18, the phone calls from doctors’ offices started: “We’re going to need to reschedule your appointment.” Governor J.B. Pritzker had issued the mandate: Unless a medical procedure was immediately essential, it wasn’t happening. Hospitals canceled everything from cancer screenings to elective surgeries — which can account for more than half of their revenue — to focus on COVID-19 care, preserving supplies and reducing the risk to other patients. Hospitals were spending more for basics like drugs, masks, and surgical gowns, while the revenue from traditionally lucrative nonemergency procedures was cut off.

During the pandemic’s first peak, in the first three months, outpatient visitors slid 30 to 50 percent in the state, says Danny Chun of the Illinois Health and Hospitals Association. In-patient visitors plunged 50 to 70 percent. Even when restrictions were lifted on May 12, many people opted to postpone their knee surgeries, mammograms, and hernia repairs — the kinds of reliable appointments that make up the core of hospital revenue. They’re also the type of procedures people are more likely to get when they can afford them — that is, when they’re on private or employer-sponsored insurance, which reimburses hospitals at higher rates than Medicare or Medicaid. With so many people losing their jobs as a result of the pandemic, it makes sense that fewer would be scheduling elective procedures — even a routine colonoscopy can cost anywhere from $3,000 to upward of $11,000 without insurance. Furthermore, people in lower economic brackets, some under- or unemployed, make up an outsize portion of COVID patients. Medicare and Medicaid reimbursement systems generally leave a hospital on the hook for between 10 and 20 percent of the care of a patient without supplemental insurance.

Collectively, Illinois hospitals were losing $1.4 billion a month in revenue. In April alone, NorthShore University HealthSystem saw its revenue drop to half of what it was in April 2019 — a decrease of $90 million. As a result of such shortfalls, many area hospital systems, including Northwestern Memorial and UChicago Medicine, resorted to furloughs, layoffs, pay cuts, and benefit reductions. Then in August, following a failed merger and financial problems that were amplified by the COVID crisis, Bronzeville’s Mercy Hospital & Medical Center said it will close altogether in early 2021, worsening an already dire lack of health care options in the predominantly African American neighborhood. The closure means that residents will have to travel more than four miles to the nearest hospital.

Fast-forward to fall, and Chicago is far from the recovery from the pandemic that was expected. After a dip in late summer, daily COVID infections have climbed. Some hospitals have managed to stabilize their finances by finding ways to encourage more non-COVID patients to seek care, including keeping COVID patients separate from everyone else. NorthShore, for example, funnels all COVID patients to Glenbrook Hospital to limit exposure at its other locations. Some hospitals are also maintaining lower staff levels and continuing to hold off on improvement projects, in preparation for the stark reality that the pandemic could linger for another year or longer.

Ann & Robert H. Lurie Children’s Hospital of Chicago was hit particularly hard because it didn’t see many COVID patients — children are less likely to get seriously ill from the virus — and also experienced a significant decline in non-COVID patients. At one point this spring, it was losing $10 million a week in revenue. (Lurie had an operating profit of $50 million last year.) “This is the most difficult period in health care that I believe we have ever experienced,” says Matthew Davis, chair of Lurie’s pediatrics department.

Since then, the hospital has been able to regain some of the patients it lost by adding plexiglass barriers and rerouting those with possible COVID infections at check-in to try to make others feel safer coming in for routine vaccinations and exams. It’s also continuing to serve patients as old as 25, raised from its previous cap of 18 to relieve pressure on other hospitals when the crisis began. As a result of these moves, Davis says, Lurie has been able to end staff furloughs and reverse senior leadership pay cuts of up to 35 percent.

NorthShore has also made significant changes to recover financially. After seeing the big drop in its April revenue, it moved to drastically trim expenses during the summer by cutting employee pay and freezing new hires. And once the state lifted restrictions on elective procedures, it also encouraged patients who had delayed care to seek treatment by putting them at ease with new safety measures, like COVID screenings and temperature checks. It paid off. In September, between NorthShore’s own measures and help from the federal CARES Act relief funding, revenue was down just 5 percent for the year. But for the fiscal year that ended September 30, the damage was still immense: NorthShore saw a $200 million net revenue decline. “The impact on the health system and all health systems across the country was astronomical,” says Sean O’Grady, NorthShore’s chief operating officer.

Executives say they’re prepared for infections to rise further — and hospital revenue to be hit harder — through the holidays, as Chicagoans face the collision of flu season with COVID (yes, you can get both at once) and the growing fatigue with social distancing. They also worry that adults and children aren’t getting the basic preventive care and screenings, like vaccinations and mammograms, they need because they’re staying home. “We’ve seen, firsthand, patients that are delaying cancer treatment, or coming to see us months after they’ve had a heart attack,” O’Grady says. “So we can’t shut ourselves down like we did before.”

But Chun says the solution to hospitals’ current situation has a lot to do with how Chicagoans hunker down for the holidays. “Here’s what we need the public to understand: All these financial pressures can be alleviated if they wear masks, social distance, wash their hands, and avoid large crowds,” he says. “If 90 percent of people would wear a mask, we’d be out of this mess in six weeks.”

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