As New Mexico readies its medical front line for a potential surge of COVID-19 cases, hospitals, particularly in smaller communities, are enduring “painful” consequences of the governor’s ban on “nonessential” procedures: A sudden financial drain is straining operations and has led to some furloughs already.
“It’s painful – it is very, very painful,” said Tanya Carroccio, chief quality officer at Gila Regional Medical Center in Silver City. “The bread and butter for rural hospitals is to be able to count on their outpatient procedures and surgeries and certainly those elective ones. It hurts.”
On Friday, one national chain with a southern New Mexico hospital filed for Chapter 11 bankruptcy, citing COVID-19 uncertainties. The state Human Services Department also announced $35 million in immediate financial help for hospitals.
Statewide, hospital administrators interviewed last week say they are trying to make the best of a difficult financial situation and keep as many key people as possible on the payroll.
In Silver City, for example, veteran operating room nurses who are sidelined from surgeries are bringing sewing machines to work to stitch protective masks. In Taos, hospital staff with no patients to care for are cleaning up the grounds outside to keep their paychecks coming.
Only weeks after the state Department of Health shut down all nonessential surgeries and outpatient procedures to ensure adequate hospital beds, supplies and equipment to treat coronavirus patients, some hospital administrators are reporting a revenue decline of 40% to 60%, said Jeff Dye, president of the New Mexico Hospital Association.
Dye said his organization estimates the total loss to hospitals statewide could be up to $200 million per month – unless state or federal emergency funds can be tapped.
“Compliance with the public health orders to reduce elective procedures and surgeries is absolutely the right public health thing to do,” Dye said. “But it’s a devastating financial decision for the hospitals.”
The loss of revenue comes at a time when smaller hospitals must step up purchases of protective equipment, ventilators and other life-saving equipment to treat coronavirus patients. Making matters worse, some patients still eligible to be treated for chronic conditions are staying away.
“Unfortunately, we are seeing a trend in which individuals are not seeking the care they might need for cardiac, orthopedic or other conditions for fear of contracting coronavirus,” said Gary Poquette, CEO of the 25-bed Mimbres Memorial Hospital in Deming.
While it is important to be cautious and shelter in place, “we are concerned that individuals in our community may be delaying much needed emergency care and exacerbating potential life-threatening illness,” he told the Journal in an email.
“People are just scared, and they’re staying away,” said David Ward, CEO of Nor-Lea hospital in Lovington, which experienced a 57% drop in patient volume after suspending its orthopedics, nephrology and urology specialty outpatient clinics in March.
Across the state, some small hospitals report that a small number of employees have been furloughed or asked to take personal leave. For now, hospital administrators are trying to retrain and repurpose others to ensure adequate staffing is available when and if they face an onslaught of COVID-19 patients.
“The decisions they’re making right now are definitely making payroll and being able to pay for the supplies. Vendors are still sending bills to hospitals, and employees are still hoping to earn a paycheck, so all of those costs are still ongoing although the revenue has dried up to a great deal,” said Dye, whose association represents New Mexico’s 46 hospitals.
Mimbres Memorial’s parent firm, Quorum Health, filed for Chapter 11 bankruptcy restructuring last week but pledged to keep the Deming hospital open for business. The state HSD announcement of $35 million relief funding through the Medicaid program noted the “combination of increasing costs and decline in revenue is putting an urgent strain on New Mexico hospitals.”
“We believe that these advance payments will provide extra resources to prepare for what will likely be the greatest challenge our health care system has ever faced,” said Dr. David Scrase, HSD Cabinet secretary in the announcement on Friday.
Across the country, as reported last week by the Office of Inspector General for Health and Human Services, hospitals are experiencing hefty financial losses at a time when they are being called upon to prepare for the worst.
CBS News reported that Boston Medical Center health system furloughed some 700 employees. A health system in Sarasota, Florida, said its revenue dropped by $16 million in March. It is furloughing some employees and cutting hours for others. Similar cuts are in place at a Syracuse, New York, hospital.
Richard Stokes, interim CEO and CFO at the Gila Regional Medical Center in Silver City, said overall volume is down 35%, including a 65% drop in diagnostic services, such as endoscopies and colonoscopies.
“But we’ve had to buy all this PPE and all the supplies and all the things necessary to care for this community. And let’s just say theoretically we don’t have a case, well, we’ve spent a ton of money, and time and resources … trying to get ready because we don’t know,” Stokes said.
As of Saturday morning, the hospital hadn’t yet had a COVID-19 hospitalization. “We pray that the trend will continue,” he added.
Some tenured OR nurses in Silver City are sewing protective masks for the hospital. And the hospital is making masks from the material in the clean outer covering of surgery trays that aren’t in use. Depending on the daily count of patients, about 10% of the medical staff is at home, on call in case of an emergency.
“My fear as an administrator of a small rural hospital is that we’re already hearing where one fairly good-size hospital system is about to declare bankruptcy, and I’m afraid that’s going to continue if we’re not very, very careful in the next 30 days,” Stokes said last week. “I think Gila Regional’s going to be fine for the next 60 days, but after that I mean we could find ourselves in a little bit of hot water as well.”
In Lovington, in southeast New Mexico, CEO Ward said his 25-bed hospital implemented a hiring freeze and asked employees to take personal time off.
“We’re cutting costs wherever we can,” Ward said. “Our fiscal year is the end of June, and we’ve committed to keep our employees in place until then, but that’s going to cost the organization between $6 (million) and $7 million in that three-month period. That’s how much we made last year as a profit, so we’ll lose in three months what we made in an entire year last year.”
At Holy Cross Hospital, which serves the 32,000 residents of Taos County, the state-ordered shutdown of nonessential medical procedures “is devastating,” said CEO Bill Patten.
“We lost over $400,000 just in one week, because most of our expenses are fixed,” he said. On a normal day in surgery, “the hospital would have performed eight to 12 procedures. Now we’re seeing one or two.”
Laying off staff temporarily hasn’t been an option, he said.
“So much of our cost is people and recruiting and retaining staff in a small rural hospital is always one of our biggest challenges,” Patten said. “If you say we’re going to be in this situation … two, three, even four months from now, when we return to some kind of semblance of normal, we’re going to want those people back and the cost of recruiting and actually getting them here. If we were to let current staff go, it’s going to far exceed what it would cost to keep the staff.”
So hospital employees are being moved from one job to another, and “rather than just having employees sitting around, we’re saying, ‘Hey, if you’re willing to do it at your normal rate of pay, we’ll put you to work out on our grounds.’ ” Some surgical nurses and staff in Taos have also been sewing protective masks for the hospital.
Holy Cross by Wednesday had dealt with two inpatients with COVID-19, one discharged, another transferred out.
Patten, like other hospital administrators in New Mexico, hopes to get relief from the recent $2.2 trillion federal rescue program, or Medicaid or Medicare enhanced payment remedies.
Sen. Martin Heinrich, D-N.M., announced Thursday he had joined a bipartisan group of 20 senators to urge HHS to prioritize rural hospitals in COVID-19 emergency response funding. And Dye said he hopes a special session of the New Mexico Legislature, still unscheduled, could provide another avenue to aid New Mexico hospitals.
“A lot of our strategies are designed to buy us time,” Patten told the Journal. If elective surgeries and procedures can resume, say in mid-June, it would still be perhaps August before the hospital would receive the payments, he said.
“So the model we’re working under is how to survive between now and August. How do we have enough cash to survive?”
Impact in Albuquerque
The financial impact on Albuquerque’s three primary big hospitals was less clear last week.
University of New Mexico Hospital has postponed more than 600 elective surgeries, and UNM’s Sandoval Regional Medical Center in Rio Rancho has delayed another 200, but “it is too early to discuss any potential losses,” said spokesman Mark Rudi.
At Presbyterian Hospital, postponing elective procedures allows critical staff to be redeployed and helps conserve personal protective equipment, said CEO and president Dale Maxwell in an email. With 70% fewer surgeries, “we did not want lower patient volumes to negatively impact staff,” he said. So Presbyterian decided that through April 30, staff pay will not be affected.
A spokeswoman for Lovelace Hospital system didn’t immediately respond to Journal questions about the impact.
Not in the plan
As of Wednesday, the state’s smallest rural acute care hospital hasn’t admitted a single COVID-19 patient, but it has seen an uptick in ER visits for “stress-induced issues,” said Guadalupe County Hospital administrator Christina Campos. “A lot of it is anxiety. People unemployed, people scared.”
The 10-bed hospital in Santa Rosa declared bankruptcy twice in the 1990s, Campos said. But after she became CEO in 2004, Campos said, “we really started saving from the get-go and we really concentrated on essential services for the community. So we’ve been socking away money for 15 years.”
Now, with a $9 million surplus, she said, “we have about a year’s worth of cash on hand.”
That kind of a cushion is a “luxury” for most rural hospitals, Campos said. But depleting that savings during an extended downturn, she said, would be “awful.”
“People think we’ve been putting that (money) away for a rainy day in anticipation of something. But we never dreamed of this. We keep saying, ‘This was not in anybody’s strategic plan.’ ”