Hospitals: Fed funds covering less than half $2.6 billion in losses

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LOUISVILLE, Ky. (WTVQ/Press Release) – Kentucky hospitals will lose an estimated $2.6 billion this year as a result of the COVID-19 pandemic, according to a new report from the Kentucky Hospital Association.

With the virus present in all 120 counties, Kentucky hospitals and the caregivers who work for them are on the front lines of the battle against the virus. In addition to the great personal toll the virus is taking, the financial impact on hospitals has been profound, the report said.

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These losses are the consequence of a drop in revenue resulting from the mandatory cancellation of elective procedures, which also resulted in furloughs for thousands of hospital employees; mandated limits on how many patients hospitals can accept; and lower patient volume due to the fact that many patients are not going to the hospital when they need to due to concerns about the virus.

In addition to the lost revenue, hospitals experienced additional costs in responding to COVID-19 as they geared up to treat COVID-19 patients, bought additional personal protective equipment, instituted enhanced environmental controls and tested and treated COVID-19 patients, who are hospitalized twice as long as the average patient.

The KHA report noted that, while the federal government provided financial assistance to hospitals to offset COVID-related costs, the assistance was less than half, or 40 percent, of the financial impact of the virus.

Kentucky’s rural hospitals, many of which were at risk of closure prior to the pandemic, are particularly vulnerable due to COVID-related costs.

Several recent studies have found as many as 28 of Kentucky’s rural hospitals were at risk of closure before the pandemic.

These hospitals serve almost half a million Kentuckians, have more than 4,900 employees, pay annual salaries of $276 million and provide $217 million in other economic benefits.

Rural hospitals face many economic burdens because they have fewer patients covered by private health insurance than hospitals in urban areas and rely more heavily on Medicaid and Medicare, which often pay hospitals below their costs for treating patients.

The report pointed out that all of the state’s hospitals are a vital part of the economic health of Kentucky communities.

Earlier this year, a umber of hospitals — large and small – cut or furloughed staff ad made other cuts.

The largest private employer in many counties, hospitals employ more than 78,000 workers across Kentucky and pay $4.9 billion in wages annually.

They, along with their employees, also support government by paying over $700 million in state and local taxes. This includes $183 million in provider taxes the hospitals pay that support the Medicaid program.

In developing the report, KHA is asking policymakers to support Kentucky’s hospitals and the 78,000 health care professionals and caregivers who work for them.

“This request for support does not come in the form of a proposal for more funding or special treatment,” the report noted. “We fully recognize the negative impact that the COVID-19 shutdown has had on businesses and individuals across the commonwealth.

“Instead, we ask that efforts by the Governor and the General Assembly to address the reduced revenue caused by the pandemic do not compound hospitals’ financial crises by imposing additional provider taxes, cutting Medicaid reimbursement or similar actions.”

It is essential that Kentucky’s hospitals are financially strong as they continue the battle against COVID-19 and provide quality care for their patients, the report concluded.