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Paduda: Watch Those Facility Costs

By Joe Paduda

Friday, May 8, 2020 | 330 | 0 | min read

As the coronavirus continues its relentless march, hospitals and health systems are getting crushed. With elective procedures banned in many states, the patients hospitals relied on to generate profits have disappeared. Meanwhile, expenses related to preparing for COVID-19 patients have gone through the roof and show no signs of abating.

Joe Paduda

Joe Paduda

Florida is especially hard hit:

A new report by the national consulting firm Crowe shows Florida health systems have suffered nearly a 50% drop in patient volume in March and April.

Hospital owner UHS just withdrew its financial guidance, with management citing concern over the “financial uncertainty caused by the coronavirus disease.” The announcement followed similar moves by hospital giant HCA, and Maryland’s hospitals are projecting a billion-dollar revenue shortfall for the second quarter. 

Hospitals in Colorado are facing an even larger reduction in revenues, and Michigan hospitals are laying off workers:

Patient volumes at our acute care hospitals and our behavioral health care facilities were significantly reduced during the second half of March as various COVID-19 policies were implemented by our facilities and federal and state governments. These significant reductions to patient volumes experienced at our facilities have continued into April 2020.

The billions sent to hospitals under the CARES Act is no panacea; on average, the funds cover less than a week’s revenue.

Implications

More than a dozen rural hospitals in the South closed last year. We can expect more in 2020.

Hospitals and health care systems are drastically ramping up their “revenue maximization” efforts. Workers’ comp payers, long seen as hugely profitable, now have an even bigger and brighter target on their chests.

What does this mean for you?

Watch those facility costs. 

Joseph Paduda is co-owner of CompPharma, a consulting firm focused on improving pharmacy programs in workers’ compensation. This column is republished with his permission from his Managed Care Matters blog.

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