COVID-19's Impact on Hospital Finances

By Gary Herbst, Chief Executive Officer of Kaweah Health

Living through COVID-19 has been an unprecedented experience and there have been an abundance of questions. In this unimaginable and ever-changing time, we are working hard to answer questions and provide factual, meaningful information. One question, that we hear consistently, is about how hospitals are doing financially during this time. Some believe that hospitals, such as ours, have profited by caring for COVID patients. This is not the case.

COVID-19 has had a devastating financial impact on Kaweah Health. Here are some of the reasons why:

• We are caring for patients who require a higher level of care and who are hospitalized longer. However, in the majority of cases, we do not receive full payment for the costs associated with caring for them (nursing care, supplies, drugs, oxygen, respiratory therapy, housekeeping, laundry, linen, etc.) In Tulare County, the majority of our population is covered by Medicare or Medi-Cal, and both pay hospitals a fixed price per COVID patient whether they are hospitalized for one or 15 days. Respiratory patients with COVID-19 are staying in the hospital an average of 11.2 days at an average cost of $32,300. While Medicare pays us $18,700 for this patient (an increase of 20 percent), Medi-Cal’s reimbursement remains unchanged, and our hospital takes the hit.
• We have had to shut down services, and cancel surgeries, procedures and other important lines of business, which contribute to our bottom line and our ability to provide services to our community. Between March 1, 2020 and June 30, 2020, we incurred a cumulative operating loss (revenues minus expenses) of $31.7 million, overwhelmingly attributable to the loss of revenue associated with these shuttered services and the losses incurred taking care of COVID-19 patients.
• We have received federal stimulus funds, but they fall far short of the losses we have incurred taking care of COVID-19 patients and closing services to create surge capacity. To date, we have received $14.4 million in federal stimulus funds through the CARES Act, which reduced our final fiscal year operating loss to $17.4 million. We also recently received $10.9 million in federal stimulus funds to further help cover our losses and those we expect to experience over the balance of the summer.
• We are paying more for personal protective equipment to protect those who are caring for our community – doctors, nurses, and other staff.
• We are paying more to support our workforce and keep clinical staff at the bedside. With nearly 100 staff members on leaves of absence due to COVID, the cost of overtime and extra shift incentives has climbed into the millions. We have also had to support our staff with child care, medical screening, treatments, etc.
• We are now paying for expensive medications to care for COVID patients. We must now purchase remdesivir, an anti-viral drug for the sickest COVID-19 patients. It requires a five-day inpatient course at $3,200 a patient. This comes with no added reimbursement from any of our payers.

We know you will continue to have questions during this time and we encourage you to visit our website, www.kaweahdelta.org/COVID19, where on a regular basis we are updating the most frequently asked questions related to COVID19. You can also submit a question to us on our website or visit our social media channels for more information. COVID-19 is always changing and we want to make sure you have the latest and most accurate information.