Coronavirus

NYC, NJ hospital leaders brace for ‘enormous’ hits to revenue

Running out of ventilators has been a major topic of discussion among New York City hospital leaders, but one finance chief said that’s not his biggest fear in the COVID-19 pandemic.

“Our number one concern is staff,” said Kevin Ward, the chief financial officer of New York-Presbyterian Queens, a 535-bed acute-care hospital. “We can have all the ventilators in the world, but we don’t have enough respiratory therapists. They’re in short supply.”

Ward spoke on a call with analysts from the investment bank Jefferies to share an update on his hospital’s experience so far navigating the novel coronavirus pandemic.

Richard Keenan, the chief financial officer of Valley Health System, a 451-bed hospital in Ridgewood, New Jersey, agreed on the call that respiratory therapists are in short supply. But that’s not all.

“But even our housekeeping and environmental services staff is getting sick and they’ve taken a big hit,” he said.

Queens had seen the most cases of any of New York City’s boroughs: about 7,000 out of almost 22,000 city-wide as of Thursday morning, according to the health department. New Jersey reported that Bergen County, which includes Ridgewood, had seen the most cases in the state: about 1,200 as of Wednesday.

It’s impossible to know at this stage how hospitals will fare financially, but many administrators—Ward included—say they’re preparing to take significant hits to their bottom lines.

New York-Presbyterian Queens has so far only gotten payment from a few of its COVID-19 patients, Ward said. COVID-19 poses a financial challenge for hospitals because the patients are expensive to treat—requiring isolation, personal protective equipment and at least a 10-day intensive care unit stay, Ward said. And most of the patients are covered by Medicare, which typically doesn’t reimburse well, he said.

“They’re not a good situation for the hospitals,” Ward said.

Keenan agreed, saying his COVID-19 patients are mostly Medicare.

“The revenue hit is going to be enormous,” he said.

The call participants did not mention the fact that the new COVID-19 economic stimulus deal includes a 20% Medicare reimbursement bump for inpatient COVID-19 patients.

Adding to that pain is putting off elective procedures to save capacity for COVID-19 patients. Ward said his hospital’s elective procedures are down 40%, which is especially hard because surgeries carry higher reimbursement than other services.

“They tend to be your higher revenue cases so they have a disproportionate effect on revenue,” he said.

A Jefferies analyst commented that 40% seems low, given other health systems have reported elective procedures dropping by up to 90%. Ward explained his hospital takes lots of trauma patients, including hip replacements necessitated by trauma. He said it could also be because the hospital categorizes more procedures as elective than others do.

“When healthcare in the state is running on a 1% margin or less, 40% to me is catastrophic,” he said.

At Valley Health System, electives are down roughly 70%, Keenan said.

As far as the surgeries being rescheduled, Ward estimates the hospital will lose at least 15% to alternative providers like surgery centers if patients don’t want to wait until mid-May.

People with high-deductible health plans who are now faced with unemployment may even defer the elective procedures longer because they can’t afford a $600 co-pay, Ward said.

The New York-Presbyterian hospital operates five freestanding imaging centers through a joint venture, and procedures are down 80%. Rather than laying off the staff, the hospital has put them on a 50% pay schedule, Ward said.

Both Ward and Keenan said they have repurposed other areas of their hospitals into COVID-19 treatment areas. At the Queens hospital that’s happened with a transitional care unit and an administrative office. The Ridgewood hospital has converted its pediatrics unit and a post-surgical recovery, among others.

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