CORONAVIRUS

Iowa's hospitals lost $433 million during pandemic

Kirk Norris, president and chief executive officer of the Iowa Hospital Association, speaks Sept. 20, 2018, during a sym
Kirk Norris, president and chief executive officer of the Iowa Hospital Association, speaks Sept. 20, 2018, during a symposium in Cedar Rapids. (The Gazette)

Iowa hospitals lost an estimated $433 million in March through October because of COVID-19, according to a report this week from the Iowa Hospital Association.

The association said that hospitals across the state have spent $1.25 billion to equip themselves and to care for people with the highly contagious coronavirus.

Relief funds from federal government stimulus programs offset much of those costs, and were included in the calculations that still resulted in a loss estimate, the association reported.

However, the estimate did not include aid from some federal programs including the Paycheck Protection Program and the Federal Emergency Management Agency, or from state funding.

In early November, Gov. Kim Reynolds approved sending $25 million of the federal CARES Act money the state received to Iowa hospitals for COVID-19 relief. Congress passed the bill in March.

Hospital leaders in Iowa say they’re worried about whether they will have to return some advanced and accelerated Medicare payments they also received earlier this year. Hospitals were able to receive in advance three months of anticipated Medicare billings, although only 77 Iowa hospitals applied. They were eligible for $928.3 million in accelerated and advance Medicare payments, IowaWatch reporting shows.

Hospital leaders fear changes in a formula used to calculate what the hospitals were entitled to could force some to pay back some of the money at a time they are strapped for cash.

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The new report is the latest in a year of grim news about financing for the 118 Iowa Hospital Association members.

CliftonLarsonAllen, a nationwide consulting firm with offices in Des Moines and Cedar Rapids, conducted a study for the association in March through October for the report. That study showed that half of Iowa hospitals were operating at a financial loss at the end of October, the association reported.

“The report underscores the immense financial strain Iowa hospitals and health systems are facing because of COVID-19,” Kirk Norris, the association’s president and chief executive officer, said in a statement.

“We also must remember that many Iowa hospitals were experiencing severe financial issues before COVID-19. A new rural emergency hospital model is needed for hospitals to survive beyond the pandemic.”

Norris said 2021 could be devastating for many hospitals and called on Congress and the Iowa Legislature to consider potential solutions.

The problem is not unique to Iowa. Three out of every four of the nation’s small critical access hospitals with 25 or fewer beds had negative operating income going into the pandemic, according to an analysis done by a collaboration of news outlets that are members of the Institute for Nonprofit News.

The Iowa Hospital Association study listed the following trends from March, when COVID-19 was confirmed in Iowa, through October:

• An 11 percent decline in outpatient visits but an 8.3 percent increase in the length of stay for acute care patients who are admitted.

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• A 17 percent decline in inpatient discharges but 26 percent increase in expenses for each.

• A 22 percent decline in ambulatory surgeries and 24 percent decline in inpatient surgeries.

• A 29 percent decline in operating margin, although the operating margin for Iowa hospitals is 2 percent with federal support. Operating margin is the difference between expenses needed to treat patients and revenue earned for that treatment. Many hospitals also get support from sources such as foundations, donors, bequeaths and other enterprises.

The drop in ambulatory and inpatient surgeries means less revenue for the hospitals while they’ve been equipping for COVID-19, interviews IowaWatch and the Institute for Nonprofit News collaboration showed.

On top of that, the Iowa Hospital Association says 17 Iowa hospitals were at financial risk of closure already than a year before COVID-19.

“It doesn’t take much to strip the internal capacity of a rural hospital,” Mark Holmes, director of the Sheps Center for Health Services Research at the University of North Carolina, said in an IowaWatch interview in late August. Nationally, 17 rural hospitals have closed this year and 132 have closed since 2010 because of financial problems, a database at his center shows.

Holmes said a lot of small rural hospitals operated with just one ventilator or one respiratory therapist. But larger hospitals in Iowa report being stretched, too — both financially and in the availability of health care professionals. About 1 of every 4 health care workers at some Iowa hospitals missed a day of work because they had to deal with the disease in their personal lives, Norris said late last month.

Iowa hospitals have about 70,000 employees.

IowaWatch, part of the Iowa Center for Public Affairs Journalism, is a nonprofit news organization and strives to be the state’s leading collaborative investigative journalism newsroom. Find more work at IowaWatch.org.

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