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Count red ink among the side effects of omicron.
University of New Mexico Hospital, the state’s only Level 1 trauma center and teaching hospital, is currently operating at a deficit, with expenses outrunning revenues by $4.6 million for the fiscal year that began July 1.
It is not because things are slow – patient volume is so high that CEO Kate Becker said staff is delivering some care in hallways.
Becker blames reimbursements that are not keeping pace with rising staff and supply costs, particularly on lower-acuity cases.
“The hospital is extremely full; we have patients everywhere. We’re working very hard to take care of them,” Becker said earlier this week in her quarterly report to the Bernalillo County Commission. “But a lot of the revenues generated by those patients are not equivalent to some of the revenues we were seeing last year when the mix was more folks in intensive care.”
More COVID-19 patients need the regular medical and surgical floors instead, she added.
“That’s good from a patient care perspective,” she said. “But, from a financial perspective, it is more challenging for the hospital.”
With expenses currently running 10% higher than the budget, UNMH is not alone.
Troy Clark, president and CEO of the New Mexico Hospital Association, said many of the 47 facilities he represents are enduring similar hardships. Though they shared $367 million in federal relief during the pandemic’s first year, the assistance did not make up for their collective $640 million shortfall, he said, and the latest round of federal aid will not chip away much more.
The assumption that COVID-19 has been a financial boon to hospitals, Clark said, is off base.
“There’s a sense out there … your hospitals are full and you’re just raking in the money,” he said. “What’s not understood is how hospitals and finances work; the cost of taking care of COVID patients exceeds what you are reimbursed for them.”
Hospital officials say COVID-19 has driven the patient load in multiple ways, including active infections and the backlog of people who delayed other medical care because of the pandemic.
But, at the same time, it has kept away some other patients, including those seeking non-emergency surgery. Christus St. Vincent in Santa Fe, for example, is currently scheduling fewer elective surgeries so as to prioritize patients coming through the emergency room, and some patients decide for themselves to put off the procedures due to present pandemic conditions. Fewer surgeries have contributed to lowering the hospital’s per patient reimbursement by 8% year over year, Chief Financial Officer Reuben Murray said.
In the same span, he said the hospital’s labor costs are up 18%, due largely to hiring temporary clinical staff. Christus St. Vincent has become increasingly reliant on traveling nurses during the pandemic, as have hospitals around the state and the country.
“With this recent (COVID) surge, it’s just really been a struggle across so many areas,” Murray said, though St. Vincent is not currently operating at a deficit.
Clark said hiring nurses through agencies is a major factor in hospitals’ current budgetary challenges. Though rates vary based on specialties and other factors, Clark said hospitals generally paid staff nurses about $30-$40 per hour before the pandemic.
But many have quit or entered the traveling pool themselves, prompting hospitals to lean on temporary hires that Clark said now run $195-$265 per hour. Some hospitals then pay existing nurses more to keep them on the job.
Becker, who told the county commission in October that UNMH had about 500 traveling nurses on the job, said they are expensive, but essential, given how busy the hospital has been. The facility has consistently operated at 130% or more of its capacity during the pandemic, according to a spokesman.
“We’ve got to get the volumes down to be able to get that number of traveling nurses down,” Becker told the commission last week.
While costs soar, revenues are generally fixed, Clark said, since hospitals rely on set reimbursements from private insurance companies, Medicare and Medicaid.
“Medicare pays you what Medicare pays you; Medicaid pays you what Medicaid pays you; commercial insurance payments are renegotiated every one to three years, but you don’t renegotiate every week when costs go up,” he said.
Efforts are underway to reduce hospitals’ current and future cost burdens, he said. He said the state is considering such short-term solutions as potentially increasing reimbursements paid by Medicaid, a state-run program.
The state, along with the federal government, is also sending clinical personnel to help at certain hospitals. State leaders also are considering ways to grow the New Mexico health care workforce in the long term, including a $50 million allocation for college nursing programs.
Becker said UNMH has a U.S. Navy team of 22 helping on site now and the state has approved another 30 staff, mostly nurses.
She told the commission that the hospital – which has a $1.3 billion annual budget – would likely stay in the red when January’s final numbers come in, but there could be some relief on the horizon.
“Our expectation is, depending on omicron and whatever other curve balls COVID throws … into February and March, we should start to see that COVID volume coming down and start to get to a more sustainable level, with both our patient volumes and our staffing,” she said. “We are aggressively managing this, but it is definitely a more challenging situation this year, and people are tired.”
