Federal COVID funds boost flagging hospital revenue

DATE: October 16, 2020

THE CENTER FOR HEALTH Information and Analysis released its monthly hospital financial performance data on Thursday, providing a picture of how hospitals fared through the first five months of the pandemic. Among the key takeaways is the fact that COVID-19 federal funds, received by many hospitals throughout the state, boosted operating revenue and income significantly.

The situation was pretty bleak in April and May after Department of Public Health Commissioner Monica Bharel issued an order requiring all hospitals and ambulatory surgical centers to postpone or cancel any nonessential, elective procedures beginning March 18.

It was a decision intended to keep personnel and medical space open for treating sick patients with COVID-19 during a time period when more than 3,000 people per day were testing positive.

For hospitals, it became almost all COVID, all the time, but income tanked. In March, the Boston Business Journal reported, nearly every acute care hospital had total margins in the negative, with a median rate of negative 28.9 percent.

Federal COVID-related funding was distributed in April, May, June, and July and those funds boosted the total margin to negative 14.9 percent in April and negative 3.3 percent in May.

It was two months later — on May 18 —that the state began Phase 1, allowing for the limited expansion of non-emergency health care services. As income started to flow in, hospitals also received $608.8 million in federal funding and $93.7 million in state funding during June and July, providing an economic boost.

Officials at the Center for Health Information and Analysis say that if no COVID-19 relief funds had been distributed, the median total margins would have been minus 1.8 percent in June and 5.8 percent in July. With the relief funds, the hospitals ended up having a median total margin of 12.3 percent in June and 22.4 percent in July.

Massachusetts General Hospital and Brigham and Women’s Hospital, the two institutions at the heart of the state’s largest health system, Mass General Brigham (formerly Partners HealthCare), was doing well pre-pandemic with a jaw-dropping $3.1 billion and $2.4 billion in net patient service revenue, respectively, in 2019, according to the BBJ.

In March, their combined operating margin dropped to a negative 74 percent. By July, the health system had bounced back to 9.8 percent after receiving $147.1 million in COVID-19 funds that month alone.

While some patients remain anxious about getting the virus, others are returning in droves for check-ups and procedures. The rebound won’t cover losses from the spring, according to Dr. Ateev Mehrotra, associate professor at Harvard Medical School and lead author of a study on the impacts of the pandemic on outpatient care. But he’s not worried.

“In many cases practices are back to their same visit volume, and theoretically that means the same amount of revenue. However, they took a substantial hit,” Mehrotra told WBUR, “But my level of concern is lower than it was previously.”

URL: https://commonwealthmagazine.org/health-care/federal-covid-funds-boost-flagging-hospital-revenue/

Sarah Betancourt, Oct 16, 2020