Hospitals reduce spending as losses increase by millions of dollars

Hospital losses continued in what would have been a recovery period. Compared to the first three months of the year, when Omicron’s surge closed elective procedures, fewer people were hospitalized with COVID-19 between April and June.

While The country’s largest system, including Mass General Brigham and Beth Israel Lahey Health, have incurred millions of dollars in losses in recent months, and losses at smaller systems and independent hospitals pose a major challenge. Eileen Murphy, president of Eileen Murphy & Associates, said smaller institutions don’t have the financial reserves or investment portfolio to offset the downturn. Murphy noted hospitals that have already cut their services in recent years, including Holyoke Medical Center, which closed a birthing center in 2020, and Beverly Hospital, which has tried to close a birth center due to staffing challenges.

Deficiency, scarcity, lack of [state] Funding through the economic development bill would cause severe distress and likely loss of services, Murphy said, referring to a package of measures including hospital funding that did not pass before the conclusion of the last legislative session in August.

South Shore Health, headquartered in WeymouthAnd the He said that in the absence of one-time events, the system incurred an operating loss of $8 million in the three months that ended in June.

In response, the health system canceled the hospital’s licensed hospice care program. Dr. Allen Smith, chief executive of South Shore Health, said the decision would eliminate 40 employees, though Smith said the hospital and nonprofit NVNA and Hospice, located nearby, had job openings.

“[Eliminating] “The hospice won’t solve our problem on its own,” Allen said. “We’re not looking to shut down a bunch of programs… but we’re seriously looking into everything.”

In addition to cutting spending, the health system has won state approval to increase its relationship with Atrios Health for surgical referrals, which will boost volume and revenue.

However, Smith said the recovery is poor, especially if there is another wave of COVID in the fall. He was hoping for the extra state money.

South Coast Health System – which has hospitals in New Bedford, Fall River and Wareham – It reported an operating loss of $17.7 million for the three months ended June. Like the South Shore, the volume of surgery has been slow to come back, stabilizing at 85 percent of where it was before the pandemic. Most of the slowdown was in the optional issues, which are often billed higher.

The hospital also saw people stay in the hospital longer than usual. Fewer discharges mean less revenue, as hospitals are paid for every discharge, not for days spent in bed.

Compounding these challenges is a “massive increase” in what the hospital spends on temporary labour, particularly for mobile nurses.

“Sometimes we spend in one month what we spend in one year,” said Dr. Rayford Krueger, chief executive of South Coast Health System.

The system required each department to consider vacancies in non-patient care positions and to evaluate positions that could remain open. While he hasn’t made any decisions about canceling services, Krueger said executives are also looking at all of the programs the system offers.

Tufts Medicine reported a loss of $103 million in the three months to June, citing many of the same challenges as its peers.

Tufts attributed about half of its recent losses to one-time training and lost productivity costs associated with installing an Epic

Michael Dandorf, CEO of Tufts Medicine, said the system renegotiated contracts with some contract labor firms to reduce their spending, and worked hard to hire more employees to reduce temporary labor expenses. The system has employed more than 4,000 people since December, cutting spending on contract labor from $20 million in March to $8.5 million in July.

Improved staffing will help the system see more patients. Dandorf noted that Tufts University refused to transfer 2,000 patients from other hospitals this fiscal year alone, due to the inability to provide more beds.

The system also reassesses each managerial appointment it makes to further reduce spending.

As the system cuts spending, it is awaiting state and federal aid, while also hoping the state legislature will determine another round of funding for hospitals.

State support would further help Tufts Medicine meet its obligations to debt holders. Although there is no current risk of default, and Tufts is paying all of its debt payments, Susan Green, chief financial officer of Tufts Medicine, said the system was concerned about meeting some of the metrics required by bondholders over the next two years.

We are doing everything we can to mitigate that. She said state support would be important.”

The sector as a whole is under pressure. In a report released in mid-August, ratings agency Fitch described the outlook for the US nonprofit hospital sector as “deteriorating,” saying business pressures and high intergenerational inflation are hurting profit margins for most providers. Higher costs, especially for nurses, will remain at a “permanently higher” level for the rest of the year and beyond.

As challenges persist, some systems have turned to innovative ways to stave off losses.

UMass Memorial Health reported an operating loss of $47.6 million in the three months ended June. The losses came even though the system was very busy – three of the four highest-revenue months in system history occurred this quarter. But the crowded hospital has exacerbated the need to travel to give birth, along with the need to replace staff who contracted the COVID virus.

In the nine months to June, UMass Memorial spent $125 million on temporary employment — compared to $49 million in the prior year period.

Perhaps the health system is in better shape than some, after the sale of a $189 million stake in Shields Health Solutions in October.

“[If] You lose out from hospital operations at this level, so how is that sustainable? Melgar of UMass Memorial Health said. “If we can’t sell the investment, we will be under too much pressure.”

Even with a financial cushion, UMass is recruiting aggressively to cut temporary labor expenses, and is looking at different ways to purchase supplies for better prices.

“We’re not at a break-even point, and that would be ideal,” Melgar said. “Hopefully we can get to it next year.”

Jessica Bartlett can be reached at Follow her on Twitter Tweet embed.

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