Steep volume and revenue drops drove record-poor margin performances.
With the COVID-19 pandemic shuttering elective procedures, the nation's hospitals saw operating margins freefall 174%, when compared with April 2019, according to a report from Kaufman Hall.
Operating EBITDA margins for April were down 118% from March, coinciding with the initial impact of the pandemic, as hospitals bore the brunt of a full month of COVID-19.
Operating margins fell 282% year-over-year and 120% compared to March. Median hospital operating margins fell to –29%, as measured by the Kaufman Hall's Hospital Operating Margin index.
Operating room minutes fell 61% in April, compared to April 2019—which Kaufman Hall said is more than triple the declines seen in March. In addition, discharges fell 30% year-over-year, and ER visits fell 43%. Outpatient Revenues fell 50% year-over-year and 51% below budget, while inpatient revenues fell 25% year-over-year and fell 30% below budget.
The losses mounted even as hospitals to drastic measures to cut costs, including widespread layoffs and furloughs of non-essential workers, and pay cuts for executives.
Kaufman Hall predicts that the aftershocks of the pandemic will lead to major changes in the healthcare industry, including reevaluations of cost structure, care models, and competitive dynamics.
"While healthcare leaders work to quantify the pandemic's near-term financial implications and develop sophisticated financial recovery plans, they must also develop a viewpoint about the post-COVID environment and plans for the roles their organizations should play," the report said.
Confusion about lethality comparisons may be owing to "a knowledge gap" in how the CDC reports on seasonal influenza and COVID-19.
New research shows that counted deaths from COVID-19 in mid-April were about 20 times greater than seasonal influenza counted deaths recorded during peak weeks of the past seven flu seasons.
"The demand on hospital resources during the COVID-19 crisis has not occurred before in the US, even during the worst of influenza seasons," co-authors Jeremy Samuel Faust, MD, of Harvard Medical School, and Carlos Del Rios, MD, of Emory University School of Medicine wrote in JAMA Internal Medicine.
"Yet public officials continue to draw comparisons between seasonal influenza and SARS-CoV-2 mortality, often in an attempt to minimize the effects of the unfolding pandemic," they wrote.
"This apparent equivalence of deaths from COVID-19 and seasonal influenza does not match frontline clinical conditions, especially in some hot zones of the pandemic where ventilators have been in short supply and many hospitals have been stretched beyond their limits."
The researchers said the confusion about lethality comparisons may be owing to "a knowledge gap" in how the Centers for Disease Control and Prevention reports on seasonal influenza and COVID-19.
The CDC, they note "like many similar disease control agencies around the world, presents seasonal influenza morbidity and mortality not as raw counts but as calculated estimates based on submitted International Classification of Diseases codes."
Thus, between 2013 and 2019, the yearly seasonal influenza deaths ranged from 23,000 to 61,000. However, the actual number of counted influenza deaths over that timespan ranged between 3,448 and 15,620 deaths each year. On average, the researchers said, CDC influenza death estimates are about six times greater than the number of counted deaths.
Conversely, COVID-19 deaths are not estimated, but counted and reported directly. The researchers suggested that a more valid measure would be to compare weekly counts of COVID-19 deaths to weekly counts of seasonal influenza deaths.
So, they did.
During two weeks in mid-April, 29,933 COVID-19 deaths were counted in the United States. In contrast, according to CDC, counted deaths during the peak week of the influenza seasons from 2013-2020 ranged from 351 (2016) to 1626 (2018).
The mean number of counted deaths during the peak week of influenza seasons from 2013-2020 was 752.4.
"These statistics on counted deaths suggest that the number of COVID-19 deaths for the week ending April 21 was 9.5-fold to 44.1-fold greater than the peak week of counted influenza deaths during the past 7 influenza seasons in the US, with a 20.5-fold mean increase," the researchers said.
"The ratios we present are more clinically consistent with frontline conditions than ratios that compare COVID-19 fatality counts and estimated seasonal influenza deaths," they wrote. "We infer that either the CDC's annual estimates substantially overstate the actual number of deaths caused by influenza or that the current number of COVID-19 counted deaths substantially understates the actual number of deaths caused by SARS-CoV-2, or both."
Faust Raps CDC Methodology
In an email exchange with HealthLeaders, Faust challenged the way CDC tracks seasonal influenza deaths.
"The CDC believes that flu counts are underestimated at several points in the healthcare system. But if that were true, we’d see increases in overall death counts in bad flu seasons. We simply don’t observe that. Their explanation in here. But the assumptions it make are simply not supported by reality. If they were, again we would see more “all cause” deaths in bad flu seasons. That does not occur," Faust wrote.
Faust said it's possible that CDC is reporting larger numbers of influenza deaths in the hopes of encouraging the public to use better hygiene and get flu shots.
"But I believe those aims can be achieved without that tactic. In fact, we tend to make the opposite argument for other vaccines. The proof that measle/mumps/rubella vaccines are so effective? That there are so few cases these days," he wrote.
Faust says he not quite clear why CDC sticks to these estimates for seasonal flu, rather than counting deaths, which they do with pediatric influenza.
"However, if they did that, they’d have to borrow those deaths from other causes, like heart failure," he wrote.
"Interestingly, if the CDC counted all of these and reported them directly it might very well be that the raw counts would come down even further than they are now," he wrote.
Why?
"If official documents are only 'allowed' to count one cause of death, that means the yearly total of deaths in the United States needs to add up to 2.5 million. In that regime, medical examiners would have to choose between causes of death," he wrote.
"For those dying of flu after a three-year battle with cancer? I’d give cancer the credit. The big question becomes: is this also happening with COVID-19? The answer is very little so far. How do we know? Because unlike a bad flu season, total numbers of deaths are up. That’s what makes this 'real.'"
Net operating income dropped 88% for the first three months of 2020, after a near-total shutdown of elective and outpatient services in the final two weeks of March.
Revenue growth at Mayo Clinic fell off a cliff in the final two weeks of the first quarter, owing to the shutdown of outpatient and elective services because of the coronavirus pandemic.
The famed, Rochester, Minnesota-based health system started the quarter in January "with strong performance" and net operating income of $153.1 million, a 6.7% margin for the first two months.
Volumes and revenues continued to be strong through the first half of March, until elective and outpatient services were shuttered on March 23.
"Mayo's 2020 first quarter results spanned two very different environments," Mayo said in a Q1 in-house analysis. "The practice experienced strong revenue growth of 8.2% in January and February over last year but was reduced by the contraction of the practice due to COVID-19 in March."
"With the onset of COVID-19, medical service revenue finished at $842 million, resulting in a net operating loss of $124 million for the month," Mayo reported.
Net operating revenues were $29 million for the quarter, down from $241 million in the first quarter of 2019, a drop of 88%.
Total revenue fell by 3.8% to $3.22 billion. Net Medical Service Revenue was $2.81 billion, up 0.7% from Q1 2019.
Mayo reported cash and investments of $10.55 billion on March 31, a drop of $647.7 million since December 31, 2019, "due largely to the volatility of the financial markets."
Key metrics Days Cash on Hand (252), Cash to Debt (252%) Debt to Capitalization (35%), and Days Revenue Outstanding (62.4) were down slightly from Q1 2019, suggesting that despite the dire quarter, the health system's finances were relative stable, Mayo said.
Dr. Qing Wang allegedly failed to disclose to NIH that he was also receiving grant money from the Chinese government.
A former researcher at the Cleveland Clinic Foundation has been arrested and charged with wire fraud and false claims for allegedly failing to disclose funding he received from the Chinese government while simultaneously accepting more than $3.6 million in funding from the National Institutes of Health, the Department of Justice said.
According to a criminal complaint filed by DOJ, Dr. Qing Wang "knowingly failed to disclose to NIH that he had an affiliation with and held the position of Dean of the College of Life Sciences and Technology at the Huazhong University of Science and Technology and received grant funds from the National Natural Science Foundation of China for some of the same scientific research funded by the NIH grant."
DOJ did not say what Wang was researching.
Federal prosecutors also allege that Wang participated in the Thousand Talents Program, which was established by the Chinese government to recruit people with access to foreign technology and intellectual property.
Through TTP, China gave Wang $3 million to enhance facilities and operations at HUST. Wang also allegedly received free travel and lodging for his trips to China, which included a three-bedroom apartment on campus for his personal use.
These perks came as Wang was also getting NIH funds, which he failed to disclose, DOJ said.
Cleveland Clinic Responds
Cleveland Clinic issued this statement regarding Wang's arrest:
"The National Institutes of Health raised concerns to Cleveland Clinic whether Dr. Qing Wang appropriately disclosed foreign research ties to China. Cleveland Clinic conducted an internal review into these matters. Based on the results of that review, Dr. Wang's employment at the Cleveland Clinic was terminated."
"Cleveland Clinic has cooperated fully with the NIH and with federal law enforcement as they conducted their own investigations into these same subjects and will continue to do so. Cleveland Clinic takes seriously its obligations to be a good steward of the federal research funds entrusted to us."
"Cleveland Clinic appreciates the commitment by the NIH and federal law enforcement to the integrity and security of research being conducted by the academic community across the country."
Economists looked at social distancing strategies adopted in U.S. counties in the past two months and the impact they had.
Shelter-in-place orders and other social distancing strategies have reduced by 10 to 35 times the spread of the coronavirus, according to an analysis in Health Affairs.
The study–led by economists at the University of Kentucky– looked at four social distancing adopted in U.S. counties from March 1-April 27, including shelter in place, bans on large gatherings such as sports events, public school closures, the shuttering bars and restaurants.
The UK modeling determined that the social distancing measures reduced the growth rate of confirmed COVID-19 cases by 9 percentage points after 16 days and suggests that the number of cases would have been 35 times higher without any of the measures.
In other words, without social distancing measures, the United States would now be contending with 35 million COVID-19 cases, rather than about 1.4 million confirmed cases.
"The numbers are eye-popping but illustrate the enormous power of exponential growth," study senior co-author Prof. Aaron Yelowitz said.
The study determined that shelter-at-home orders and closing entertainment venues had a greater effect on slowing the spread of the virus than did banning large social gatherings and closing public schools.
"There are many potential reasons and our arguments for non-findings are speculative, although we think it could be the case that those measures simply displace social interactions rather than reducing such interactions," Yelowitz said. "For example, if parents congregate in parks when schools close, it's possible that coronavirus is spread approximately the same."
Senior co-author Prof. Charles Courtemanche said that "most large events — like March Madness — were already being canceled anyway prior to any official prohibitions, which may have made these prohibitions redundant."
Courtemanche said the UK model "suggest that light measures don't work, and strong measures do."
"But they don't really say anything about intermediate measures — like opening restaurants at reduced capacity, or allowing socialization with masks," he said. "Since we don’t know what each intermediate step towards reopening will do, it makes sense to go one step at a time and look carefully for signs that the rate of spread is picking back up."
Yelowitz said states in the process of reopening should "watch some of the early openers to see what happens."
"Given exponential growth, the rise in cases often looks unimpressive until right before things explode," he said.
The awards recognize patient safety champions at the national, local, and individual levels.
HCA Healthcare and WellSpan Health have been named winners of the John M. Eisenberg Patient Safety and Quality Awards for their efforts to identify and reduce sepsis.
The award, bestowed by the Joint Commission and the National Quality Forum, is given for national, local, and individual categories.
"The Eisenberg Awards identify significant and lasting contributions to improving patient safety and health care quality that are consistent with the aims of the National Quality Strategy: better care, healthy people and communities, and smarter spending," the Joint Commission and NQF said in a joint press release.
Gordon D. Schiff, MD, an internist, associate director of Brigham and Women's Center for Patient Safety Research and Practice, and director of the Harvard Medical School Center for Primary Care Harvard Medical School, won the Eisenberg "individual achievement" award.
Schiff is well known on the patient safety and quality improvement realm, having authored more than 250 articles on safety issues related to health informatics, and medication and diagnostic errors. He is a founding contributor to the Society to Improve Diagnosis in Medicine's Diagnostic Error in Medicine international conference series, and a reviewer of the National Academy of Medicine Report: Improving Diagnosis in Healthcare.
Before joining Brigham and Women's a decade ago, Schiff led quality and safety projects at John H. Stroger, Jr. Hospital in Chicago.
HCA Healthcare won the Innovation in Patient Safety and Quality at the National Level for developing the world's largest continuously operating sepsis surveillance system.
The hospital company's Sepsis Prediction & Optimization of Therapy (SPOT) was rolled out 2018 in 164 U.S. hospitals. SPOT uses algorithms to analyze sepsis development patterns across HCA hospitals and can detect sepsis six hours earlier than traditional screenings.
Using SPOT, HCA saw improvement in sepsis mortality, and intervention efforts, nearly 8,000 patient lives have been saved since 2013.
Jonathan Perlin, MD, HCA CMO, said the award has particular meaning for the Nashville-based, for-profit hospital company because "the current public health climate of COVID-19 has emphasized now more than ever the importance of early detection of life-threatening illnesses."
"We are honored to receive this respected award for our technology that helps clinicians detect sepsis earlier, accelerates treatment, improves the care provided to patients, and helps save lives," he said.
WellSpan Health won the Innovation in Patient Safety and Quality at the Local Levelfor creating a "Central Alert Team" of critical care nurses who continuously telemonitor patients at all WellSpan hospitals from a remote "bunker." The York, PA-based health system estimates that it saved 350 lives "and counting" by reducing early sepsis detection and screening times from 67 minutes to 12 minutes.
"The team is a marriage of real-time electronic healthcare data and a highly skilled clinical team," said Steven Delaveris, DO, WellSpan's vice president of medical services. "That powerful combination results in WellSpan hospitals having some of the best survival rates for sepsis in the country. In real terms, this team is saving lives."
Now-defunct Sovereign Health says the defendants schemed to deny payments so they could recoup $390 million Centene lost when it purchased Health Net.
Sovereign Health has filed a $1.125 billion RICO lawsuit against Centene Corp., Health Net, and their attorneys, alleging that the defendants schemed to deny payments owed to the now-defunct San Clemente, CA-based mental health and addiction services provider.
The 30-page suit alleges that the defendants "engaged in practices that are in violation of the Racketeer Influenced and Corrupt Organizations Act (RICO); Conspiracy to Violate RICO; Intentional Interference with Prospective Economic Advantage, Violation of Unfair Competition Law; and Slander."
Sovereign, which operated nine mental health and substance abuse treatment centers in California and four other states before shuttering in July 2018, is seeking $625 million in damages, plus interest accrued, and $500 million in punitive damages.
St. Louis-based Centene and Woodland Hills, CA-based Health Net did not respond to requests for comment. HealthLeaders' was unable to locate a spokesperson for Manatt, Phelps & Phillips.
Hospitals reported 134,000 job cuts, but physicians and dentists offices and other outpatient care venues shuttered by the coronavirus pandemic bore the brunt of the losses.
With the COVID-19 pandemic steamrolling much of the nation during April, new federal data show the healthcare sector shed 1.4 million jobs for the month, as hospitals and outpatient care venues shuttered money-making elective services and slashed payrolls to stem the red ink.
Hospitals reported 134,000 job cuts, but dentists offices (-503,000), physicians offices (-243,000) and other outpatient care venues (-205,000) accounted for the bulk of the losses for April, which saw a record 20.5 million job losses in the larger economy for the month, the worst in U.S. history, as the unemployment rate rose to 14.7%, a level not seen since the Great Depression, according to figures released Friday by the Bureau of Labor Statistics.
"The changes in these measures reflect the effects of the coronavirus (COVID-19) pandemic and efforts to contain it. Employment fell sharply in all major industry sectors, with particularly heavy job losses in leisure and hospitality," BLS said.
As bad as the April numbers are, they may be lowballing the extent of the job cuts, both in healthcare and in the broader economy. That's because BLS bases its employment reports on mid-month surveys and unemployment claims data indicate that millions more jobs may have been lost in the last half of April.
In addition, the jobs report only counts people who are looking for work, and not those temporarily furloughed.
April marks the second straight month of job losses in healthcare.
For decades, the nation's healthcare sector has been a job-creating powerhouse. In 2019, nearly one-in-five jobs created in was in healthcare, and 374,000 jobs for the year – about 33,000 jobs each month –which greatly outpaced nearly every other major sector of the economy, BLS data show.
The 2019 figures included 269,000 new jobs in ambulatory services, up from 219,000 jobs in 2018, and 102,000 new hospital jobs, down from 107,000 new jobs in 2018.
The April employment numbers are considered "preliminary" and could be revised.
As alarming as the numbers appear, the researchers said, their estimates "may be slightly conservative."
COVID-19 kills 1.3% of symptomatic people and could kill 500,000 Americans in the coming months if as many people contract the highly-contagious virus this year as contracted the seasonal flu last year, according to a caveat-laden estimate published Thursday in Health Affairs.
"After modeling the available national data on cumulative deaths and detected COVID-19 cases in the United States, the IFR-S (Infection Fatality Rate – Symptomatic) from COVID-19 was estimated to be 1.3%," said the researchers, led by Anirban Basu, Stergachis Family endowed director and professor in the Department of Pharmacy, CHOICE Institute, University of Washington, Seattle.
"This estimated rate is substantially higher than the approximate IFR-S of seasonal influenza, which is about 0.1% (34,200 deaths among 35.5 million patients who got sick with influenza)."
"If we carry out a thought experiment where 35.5 million individuals would contract COVID-19 illness this year in the US (i.e., the same number as flu last year) then, in the absence of any mitigation strategies or social distancing behaviors and the supply of health care services under typical conditions, our IFR-S estimate predicts that there would have been nearly 500,000 COVID-19 deaths this year."
As alarming as the numbers appear, the researchers said, their estimates "may be slightly conservative."
"To the extent that COVID-19 is more infectious than flu and does not have any protection from a vaccine or treatment, the number of infections, and hence the number of deaths, would be higher," they said.
Using GitHub data from the Johns Hopkins Repository and data from The New York Times, the researchers looked at 116 counties in 33 states and found 40,835 confirmed cases and 1,620 confirmed deaths through April 20.
Asymptomatic COVID-19 patients who recovered with no major symptoms were not counted in the data, which the researchers acknowledged skewed results.
Limitations and Caveats
The researchers acknowledged limitations in their analysis that could skew results.
"First, we acknowledge that our estimate of IFR-S would be higher than the true overall IFR. This is because our model relies on identified cases who are presumably all symptomatic COVID-19 patients," the researcher said. "Therefore, even at the limit, our estimated rate would not include the fraction of patients who may have the infection but remain and recover asymptomatically."
The researchers also said they could not estimate age-adjusted IFR-S because the data isn't available "to assess the distribution of IFR-S across age and comorbidity profiles of patients."
"One would need, ideally, individual-level data, and at the least group-specific data to estimate such dispersion, which are not publicly available," they said.
The researchers also went with the assumption that the supply of healthcare services, including hospital beds, ventilators, and access to providers, would continue into the future.
"Constraints in the supply of health care services could surely increase IFR and the overall fatality rates," they said. "We hope that simulations to understand and forecast the impact of such shortages can be improved using our estimates of IFR-S as the baseline."
The $35 million, 80,000-square-foot hospital is expected to open in the fall of 2021.
Tampa General Hospital and Kindred Healthcare, LLC have created a joint venture to build and run a freestanding 59-bed inpatient rehabilitation hospital in Tampa Bay, the two companies said.
"As the region's only Level One trauma center, Tampa General Hospital has for decades been providing life-saving care that includes inpatient and outpatient rehabilitation services," Tampa General President & CEO John Couris said.
"Now, by partnering with Kindred, we are enhancing patient access and clinical outcomes while providing the latest innovation and technology," he said.
The $35 million, 80,000-square-foot hospital will be located on Kennedy Boulevard between Oregon Avenue and Willow Avenue in Tampa. Groundbreaking is planned for this summer and the hospital is expected to open in the fall of 2021.
Under the joint venure, the Louisville, Kentucky-based healthcare services provider will manage the day-to-day operations of the hospital and more than 140 caregivers and staff.
Kindred COO Russ Bailey said the project is Kindred's first freestanding rehab hospital in Florida.
"In bringing this partnership together, we saw an opportunity to work with a premier healthcare provider to help patients in the Tampa Bay area and beyond recover from their illnesses or injuries, restore function and regain the independence needed to get back to their lives," he said.
Tampa General Hospital will provide medical services such as imaging, lab and surgical services.
Tampa General Hospital already runs an inpatient rehab facility that is accredited by the Commission on Accreditation of Rehabilitation Facilities. The hospital's clinical teams will move to the new site, while Tampa General will continue to provide pediatric and outpatient rehabilitation at other sites.
The new hospital will have all private rooms, a brain injury unit with private dining, a therapy gym, and transitional living apartments to help patients heal in a personalized environment as they prepare for independent living.
