Indiana hospitals needing a lifeline; financial fallout surfacing amid COVID surge

Coronavirus

INDIANAPOLIS – The Hospital Association is warning that while health care facilities are already having to furlough workers, they may face layoffs in the future.

The state of Indiana shut down in March due to the coronavirus outbreak. It forced hospitals and health care systems everywhere to prepare for an influx of COVID-19 patients. Facilities shelled out millions of dollars to double their ICU beds, buy more ventilators and personal protection equipment. In some cases, they had to spend eight to ten times the amount they normally would have because of a supply and demand issue.

“We spent, I think, above and beyond what we had anticipated spending,” Steve Long, the President of Hancock Regional Hospital, said. “We spent more money while, in time, taking a huge hit on revenue.”

The hospital has faced a 20% reduction in revenue this year compared to last. It, like many other health care systems, is now dipping into reserves to make ends meet.

“It is unlike anything I have ever seen in my career,” Long said.

The Hospital Association said the financial fallout is being felt state and nationwide.

“We’ve seen, across the country really, an epidemic of hospital closures and unfortunately, we were just starting to see signs of that fragility here in Indiana,” Brian Tabor, the President of the Indiana Hospital Association, told CBS4. “We had our first bankruptcy of a community hospital in Fayette County late last year and I was very worried about some of our members already teetering on the edge of having to reduce services and in some cases, having to look at closure.”

According to the Rural Hospital Sustainability Index, Indiana has 26 rural hospitals. Eight of them, which were unnamed, were considered at “high risk” of closing before the pandemic. That’s 31% of the state’s rural hospitals, some of which offer the only critical care access for miles.

Hospitals not only spent more money on equipment, but also life-saving drugs. Tabor said the cost of prescription medications that hospitals need to have in stock remain inflated due to the pandemic.

“A lot of costs really went through the roof,” he explained. “It’s a challenge, it still is a challenge and it has taken a toll.”

Hospitals received federal funding through the CARES Act, and have so far used that assistance to sustain their work force and purchase personal protective equipment (PPE). But with another round of COVID expected in the fall, health care experts are concerned the hospital industry will suffer financially.

“We appreciate the leadership of our representatives and senators serving in DC. They provided vital relief to hospitals but more will ultimately be needed,” Tabor pointed out. “The journey isn’t over yet.”

One of the Indiana hospitals that had to adjust quickly to the pandemic was Margaret Mary Health in Batesville.

“It hit hard and fast,” he told CBS4, referencing the COVID outbreak. “Friday the 13th of March, it got really bad.”

Within about a week, Margeret Mary Health was nearly full to the brim with confirmed or suspected coronavirus cases. Tim Putnam said his hospital staff scrambled to accommodate the surge. Still, his hospital is facing financial challenges as well.

According to the Flex Monitoring Team, which is a rural health research center, hospitals – on average – can only operate 46 days without any cash flow. Putnam said a lot of hospitals have had to that lately and are otherwise relying on federal assistance, especially as patient volumes remain low. He also mentioned that a lot of the patients, including COVID-19 patients, aren’t paying for their services up front.  They receive the care they need and then pay later. Hospitals are therefore having to wait to see that revenue stream.

“That’s what you have to do but there is no guarantee you are going to get paid for that,” he explained.

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