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Ongoing Pandemic Stretching Health Systems and Hospitals to Their Limits

Analysis  |  By Christopher Cheney  
   February 11, 2022

Health system and hospital executives say workforce challenges and financial strains are unsustainable without government support.

The delta and omicron coronavirus variant surges have pushed health systems and hospitals to a breaking point, a trio of healthcare provider executives said yesterday during a webcast hosted by the American Hospital Association.

The coronavirus pandemic is the biggest public health crisis in generations. The pandemic has strained health systems and hospitals on several fronts, including staffing, supply chain, and finances. In 2020 and 2021, health systems and hospitals received financial assistance from the federal government, but that assistance is dwindling.

Health systems and hospitals need a new infusion of federal support to avoid calamity, Craig Cordola, executive vice president and chief operating officer of St. Louis-based Ascension, said during yesterday's webcast. Ascension operates 142 hospitals in 19 states and the District of Columbia.

"The healthcare system needs additional support now to address the immediate impacts of the exponential new costs incurred because of delta and omicron, which hit hard in the second year of the pandemic. We do appreciate that Congress recognized the need early in the pandemic to provide financial support to hospitals and health systems, but most of that support was provided before the delta and omicron surges, which have placed unprecedented strain on our caregivers," he said.

Workforce challenges

The omicron surge has created severe workforce problems at health systems and hospitals, Cordola and the other healthcare provider executives said.

"We have had a record number of associates who were on paid furlough due to COVID infection and exposure. This has increased our need for contract staffing and created unprecedented spikes in our labor costs, compounding the already difficult position we have been in regarding the need for additional staff and caregivers across our health ministry. The cost impact related to the additional contract staff alone has been substantial. In a typical year, we might spend $100 million on contract labor. We are now spending that much per month," Cordola said.

The pandemic has taken a heavy toll on healthcare workers, said Lori Morgan, CEO of 619-bed Huntington Hospital in Pasadena, California.

"The care that our staff has provided has been physically, mentally, and emotionally taxing. The pandemic has been an unending marathon of illness and death that none of our caregivers had previously experienced. In addition to the burdens of their work, our staff have all of the same pressures of COVID infection, death, and family and societal responsibilities at home. Yet, they get up every day and come to work to care for those who need us, and the need has been great. Our teams are exhausted, and they are burned out. The toll that this has taken has led to many early retirements and—worse of all—those within the first few years of training have started to leave the profession. Our retirements have increased more than 20% over usual levels and those leaving healthcare in the first few years post-training has become surprisingly common," she said.

Workforce shortages are widespread, said LaRay Brown, president and CEO of One Brooklyn Health System, which features three hospitals and two large nursing homes in Brooklyn, New York. "The workforce shortage is not just nurses. It is respiratory therapists. It is lab technicians. It is phlebotomists. Many people are leaving the healthcare workforce. Many folks have accelerated their retirement plans. Even more concerning, many of our staff are deciding to work for agencies, where they can make their annual salary in three months, even if they have to travel."

Workforce shortages are reaching epic proportions, Morgan said. "The long-term availability of well-trained providers needed for future care is tenuous. Prior to 2019, there was already concern over impending staffing shortages, with the aging of baby-boomers, but there is now a looming disaster."

Financial difficulties

For health systems and hospitals, the economics of the ongoing pandemic have been devastating.

"In addition to increased labor needs as well as labor costs, we are experiencing significant increases in costs due to supply constraints and medications. During COVID, we have had to do several things that were new for us. We have provided community COVID testing, community vaccine clinics, alternate care sites, dedicated COVID units, and employee and visitor screening stations in addition to our normal standards of care. In the face of these increased costs and responsibilities, the high volumes of COVID patients necessitated that we either stop or severely curtail elective procedures and care. This means in the face of increasing expenses it was necessary to limit our revenue-generating capability," Morgan said.

The financial strains of the pandemic have worsened over time, she said. "As just one example, our inpatient surgeries were 26% and 23% below 2019 levels in 2020 and 2021, respectively. This combination of increased care costs and decreased revenue-generating capacity is not sustainable. Each surge with COVID variants has made this problem worse."

One Brooklyn Health System is staring into a financial abyss, Brown said.

"Our hospitals are safety net hospitals. More than 45% of our patients rely upon Medicaid, and another 25% rely upon Medicare. Therefore, our financial circumstances were not stable before COVID, and they are now at crisis levels. We have had to suspend elective procedures. We have had to conduct vaccination efforts—we have given more than 150,000 vaccines for individuals in our communities. We have had to put screening into place for not only our staff but also visitors and vendors. We have put in place infusion services for monoclonal antibody treatment. We have done all of those things to be responsive to our communities and to our staff," she said.

Plea for financial support

The federal government should resume direct financial assistance for health systems and hospitals as well as stop Medicare sequester cuts scheduled to begin in April, the healthcare provider executives said.

Cordola said other financial assistance is also necessary. "We do believe the government does have a role to play. They are already sizeable payers for us, but the challenges that health systems face are bigger than what we can tackle on our own. It is going to require some short-term and long-term solutions. In the longer term, we look to operational policy solutions that will bolster our existing workforce and grow their ranks. We urge policy makers to dedicate additional resources to surge capacity support from both federal and state sources. We need nursing education, including more dollars for faculty, loan repayment programs, and direct scholarships."

Christopher Cheney is the senior clinical care​ editor at HealthLeaders.


KEY TAKEAWAYS

Workforce shortages are increasing labor costs as health systems and hospitals rely on expensive agency workers to maintain staffing levels.

The economics of the pandemic are placing a financial strain on health systems and hospitals, with increased costs and decreased revenue.

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