Bernard J. Wolfson
Children have largely escaped the ravages of COVID-19, however kids’s hospitals haven’t eluded the monetary ache the pandemic has wrought on well being care suppliers.
Pediatric hospitals provided themselves as backups to their grownup counterparts in case of a surge of coronavirus sufferers. They suspended nonemergency surgical procedures and stockpiled protecting gear and virus check kits, in keeping with hospital executives and monetary analysts.
But, in lots of areas, the surge was smaller than anticipated – or hasn’t materialized. And kids’s hospitals which have provided to take sick children off the arms of grownup hospitals, or prolong the age of individuals they admit, haven’t seen an inflow of sufferers to fill the beds they emptied. As a end result, quite a few pediatric services, like lots of the grownup ones, face sharply declining revenues and further bills.
“We turned off a significant volume of our activity for a surge that isn’t going to occur. And since we’ve had continuing expenses, it’s been pretty devastating,” mentioned Paul A. King, CEO of Stanford Children’s Health, which runs Lucile Packard Children’s Hospital in Palo Alto, California.
King mentioned he anticipated annual web income for the hospital and its affiliated clinics to drop about 10%. Lucile Packard’s web income in 2019 was about $1.7 billion, in keeping with information from California’s Office of Statewide Health Planning and Development.
Other kids’s hospitals have given equally downbeat assessments.
Many of them — together with Lucile Packard and UCSF Benioff Children’s Hospital — have furloughed employees members, required them to make use of paid trip time, or minimize hours or pay.
Robin Leffert, a registered nurse at UCSF Benioff’s hospital in Oakland, California, mentioned she’s seen a “huge drop-off” in sufferers. Many staffers have been quickly minimize, requiring the nurses who’re nonetheless working to carry out further duties. “The physical environment feels different,” she mentioned. “There’s an eerie, empty quality to it. But that doesn’t decrease the tension we are feeling.”
Stay-at-home orders have decreased automobile accidents, accidents and diseases that might usually carry children to the ERs of youngsters’s hospitals, whereas mother and father’ concern of exposing their households to the COVID-19 virus has exacerbated the development.
In early February, Jennifer Griffin, a 44-year-old mom of two boys, determined in opposition to taking her 9-year-old for adenoid removing surgical procedure at Renown Children’s Hospital in Reno, Nevada, the place they dwell.
“We were not comfortable with what was going on with COVID and didn’t know what the exposure was going to be like,” Griffin mentioned.
Renown, like many different kids’s hospitals, has begun to renew among the nonemergency surgical procedures it halted because the COVID pandemic unfold. Griffin remains to be not satisfied it’s secure to herald her son, nonetheless.
“If people continue to not abide by the distancing guidelines and isolation guidelines, I might wait,” she mentioned.
Nicholas Holmes, chief working officer of Rady Children’s Hospital in San Diego, mentioned his facility faces related father or mother considerations and is making a push — by way of social media and in collaboration with native pediatricians — to “make sure families know it is safe to come to the campus.”
For all their present issues, nonetheless, pediatric hospitals had been typically in a stronger monetary place than grownup services earlier than the pandemic, so lots of them “are absolutely well positioned to weather the storm,” mentioned Kevin Holloran, a senior director at Fitch Ratings.
A 2019 Fitch report based mostly on 2018 hospital audits confirmed the combination working revenue margin of a consultant pattern of not-for-profit kids’s hospitals was practically triple that of nonprofit grownup hospitals. The pediatric services had sufficient money available to final 1.6 occasions longer than the grownup hospitals.
In California, the average operating profit margin of children’s hospitals was nearly 3 times that of non-children’s services final yr — although particular person outcomes ranged broadly, from a particularly worthwhile 25.38% for Rady to working losses for UCSF Benioff’s Oakland hospital (-Zero.78%) and Lucile Packard (-2.53%), in keeping with the Office of Statewide Health Planning and Development.
Holloran and others say kids’s hospitals usually profit from robust philanthropic and public assist, and their specialization in advanced acute circumstances ends in larger costs whereas usually affording them a commanding pediatric market share.
In 2018, California voters accredited $1.5 billion in state bonds to assist kids’s hospitals with capital bills together with tools, building and seismic retrofitting. That means they’ll save among the they’d have spent on such tasks.
So far, nonetheless, simply 9% of that cash — $142.1 million — has been distributed, and to solely three hospitals, in keeping with Frank Moore, govt director of the California Health Facilities Financing Authority.
Children’s hospitals throughout the U.S. have reported declines in surgical procedure and outpatient procedures of 60% to 80%, with inpatient admissions minimize by practically half as of the tip of April, mentioned Amy Knight, chief working officer of the Children’s Hospital Association in Washington, D.C.
At Children’s Hospital New Orleans, ER visits plummeted from four,000 in February to 1,700 in April, mentioned Matt Schaefer, the chief working officer. Outpatient visits dropped from 1,100 to about 400 over the identical interval. The hospital, like others across the nation, has managed to offset among the loss in outpatient quantity with telehealth.
When COVID-19 was wreaking havoc in southeastern Louisiana, the youngsters’s hospital provided to take pediatric sufferers from grownup hospitals and admit sufferers as much as age 30, mentioned George Bisset, the chief medical officer. “But we didn’t get a lot of takers.”
Children’s services obtained just about not one of the first $30 billion in federal aid cash meant for hospitals and different suppliers, although they’ve obtained a few of a subsequent $20 billion tranche.
Children’s hospitals which might be a part of bigger well being programs might also profit from the help obtained by affiliated grownup hospitals. And belonging to a hospital chain can enable for higher operational flexibility, trade executives say.
Cohen Children’s Medical Center in Queens, New York, a part of the $13.5 billion, 23-hospital Northwell Health system, redeployed quite a few employees members to the grownup hospitals that had been struggling to deal with an onslaught of COVID-19 circumstances, mentioned Dr. Charles Schleien, Cohen’s vp for pediatric providers.
Cohen additionally turned over greater than half its beds to Long Island Jewish Medical Center, an grownup hospital related to Cohen by a hallway, and transformed just about each obtainable house to extra grownup beds, Schleien mentioned.
But filling beds with COVID sufferers doesn’t offset the misplaced income from suspending worthwhile elective surgical procedures anyway, Schleien mentioned. “The economics of it are brutal, because when you lose elective surgeries, that’s where your margin is.”
Even although kids’s hospitals have begun to renew nonemergency surgical procedures, they may possible proceed to face monetary challenges.
“If we enter into a recession, and particularly if it is prolonged, that will have an effect on hospitals, including children’s hospitals, because people won’t have jobs and may be uninsured, or more may be on Medicaid, which doesn’t pay as well,” mentioned Lisa Martin, a senior vp on the not-for-profit well being care rankings workforce at Moody’s Investors Service.
In California, practically 60% of youngsters’s hospital expenses are tied to Medicaid, greater than double the proportion for grownup hospitals, in keeping with OSHPD information. At some pediatric services within the U.S., that determine is properly above 70%.
After spending staggering sums to mitigate the implications of the pandemic, Congress will likely be on the lookout for applications to prune, mentioned Knight, of the Children’s Hospital Association. “One with a target on its back is Medicaid.”
KHN senior correspondent Jordan Rau contributed to this report.
This KHN story first printed on California Healthline, a service of the California Health Care Foundation.
Kaiser Health News (KHN) is a nationwide well being coverage information service. It is an editorially unbiased program of the Henry J. Kaiser Family Foundation which isn’t affiliated with Kaiser Permanente.