In a worst-case scenario, Iowa’s hospitals could see a loss of millions — or even billions — of dollars as result of the coronavirus pandemic.
The impact of such a financial loss, without the aid of federal and state dollars, likely would result in the closure of the state’s smallest hospitals, said the state’s top hospital officials Wednesday.
“It’s difficult to predict, but we’re relatively certain we will lose a hospital in Iowa because they don’t have capacity to withstand downturn in revenue,” Marty Guthmiller, CEO of the Orange City Area Health System and chairman of the Iowa Hospital Association board of directors, said during a virtual news conference Wednesday.
The Iowa Hospital Association released a new cost analysis based on data from member hospitals that predicts the exact cost health care systems are facing as mitigation efforts around COVID-19 continue to drive down revenue and increase expenses.
The analysis, conducted by Minneapolis, Minn.-based CliftonLarsonAllen using Iowa hospitals’ survey responses, follows three specific models — better-case, mid-case and worse-case scenario.
The simulation estimates coronavirus-related costs for hospitals will range between $975 million in a “better-case” scenario and $1.26 billion in a worst-case scenario through the end of June.
The vast majority of the state’s hospitals currently are “operating in the red” after a 395 percent decline in operating margins between March and April.
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According to the health care association, the average revenue loss through mid-April for 89 Iowa hospitals was between 43 percent and 55 percent.
As the coronavirus swept through the states, hospitals postponed elective surgeries and services. The routine care that did continue was conducted care through telehealth rather than in-person visits.
Dr. Ernie Goss, Jack MacAllister Chair in Regional Economics at Creighton University in Omaha, Neb., said in a webinar on COVID-19’s economic impact this week that this has become “a big issue” nationwide.
“The health care industry has been, I won’t say decimated, has been hurt, significantly hurt, because we’re not getting colonoscopies, we’re not getting mammograms, all of these preventive health care measures that we’re not taking advantage of, which is going to increase the morbidity later on,” he said.
“I mean, we’ve got to wake up here.”
Even urban hospitals aren’t safe from this hit. David Stark, CEO of UnityPoint Health-Des Moines, said that health system saw a 41 percent decline in revenue for the month of April.
That revenue loss is in addition to unpredicted expenses the Des Moines-based health system — along with the state’s other hospitals — have incurred as a result of the pandemic. UnityPoint Health-Des Moines, for example, has spent $2 million alone on staffing the front entrances to screen everyone coming to the hospital for symptoms of COVID-19.
Across the state, hospitals are projected to lose about $1.4 billion between March and September, according to the Iowa Hospital Association.
However, looking into the next several months, the cost analysis expects Iowa’s hospitals to “recapture” some of that revenue as providers begin to conduct more surgeries and outpatient visits.
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Despite that, the analysis theorizes hospital revenues may never will return to the same level as they were before COVID-19. In one such scenario, hospitals are expected to lose as much as 2.17 billion by the end of December.
“Although much has stabilized from the beginning of the COVID-19 crisis, it certainly still leaves hospitals in a precarious situation going forward,” said Kirk Norris, president and CEO of the Iowa Hospital Association, during the virtual news conference.
Norris said the solution lies on the policy front. While funding from the CARES Act and programs such as the Paycheck Protection Program has helped hospitals cope, Norris said the association would like to see more federal dollars funneled to health systems in need.
In addition, Norris said the association will continue to lobby the Iowa Legislature for additional allocations during the session.
Gazette reporter James Lynch contributed to this report.
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