Are hospitals making money treating COVID-19 patients?

September 12, 2020 admin 22 Comments COVID19, Hospitals, making, money, patients, treating

On HCA Healthcare’s second-quarter investor call, an analyst asked the for-profit chain’s chief financial officer an intriguing question: What’s the profitability of COVID-19 patients?

Posed to most other health systems, such a query would have sounded absurd. But the Nashville-based hospital giant had just posted $1.1 billion in profit, up 38% from the prior-year period, even as elective procedures were largely shut down.

Finance chief Bill Rutherford responded that coronavirus tends to prompt longer lengths of stay and higher acuity than typical hospitalized patients. “It’s too early to convert that to profitability,” he said. “Our focus is making sure we’ve got all the resources we need to care for those patients.”

Examples of wealthy health systems reporting higher 2020 profits, anecdotes of sky-high bills for COVID treatment and billions in federal grants have raised the question of whether a subset of well-performing hospitals are making money on their COVID books of business.

Most hospitals, though, appear to be losing money on COVID care, and that’s not counting the pandemic’s most detrimental effect: the plunge in profitable elective procedures. Hospitals’ divergent reimbursement experiences underscore the pandemic’s role in deepening the split between wealthy systems and their financially vulnerable peers.

Now, as the country heads into an expected second wave of the pandemic, hospital administrators need to keep trimming expenses while revenue lags and the federal government makes tough decisions about how to allocate aid with little information to go on.

Some experts are hoping HHS will consider financial need when allocating the remaining $57 billion in federal Coronavirus Aid, Relief, and Economic Security Act grants. So far, a little over half the Provider Relief Fund grants distributed have been based on prior revenue, with large, financially secure systems amassing hundreds of millions in aid.

“There is clear evidence that many hospitals that have done financially well historically, have good overall margins and hundreds of days cash on hand are getting millions in cash disbursements due to the revenue-based formula,” said William Schpero, an assistant professor of health policy and economics at Weill Cornell Medical College. “That money might be better used elsewhere, whether among hospitals that have been particularly hard-hit or that are financially vulnerable.”

A hospital’s true margin on COVID care will probably remain a mystery, experts say. That’s because the pandemic, unlike any other crisis that’s hit the industry, has come with a number of confounding factors that make it impossible to isolate the margin on treating seriously ill coronavirus patients. Most importantly, hospitals’ biggest source of revenue—nonurgent procedures—dropped out from under them, and there’s no telling when, if ever, it will completely return.

The crisis has sunk the margins of large systems like Mass General Brigham in Boston and Sutter Health in Northern California, but others, like Kaiser Permanente in Oakland, Calif., and ProMedica in Toledo, Ohio, are doing better than ever.

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