Not-for-profits’ financial outlook downgraded
MOODY’S INVESTORS SERVICE last week shifted its outlook for not-forprofit hospitals from stable to negative, noting financial challenges that will persist long after the COVID-19 pandemic subsides.
Hospitals will have to contend with lost revenue from canceled elective surgeries, high staffing costs, more unemployed individuals and investment losses, analysts said. Moody’s had projected 2% to 3% increased cash flow in 2020 and now expects cash flow declines as the number of cases spike.
“We should see some containment of the outbreak in the second half of 2020 along with a gradually recovering economy,” Diana Lee, vice president at Moody’s, said in prepared remarks. “However, there is a high degree of uncertainty and the risk that the outbreak will be prolonged and the economic fallout will be more severe is elevated.” Larger health systems will typically weather the storm better than their smaller peers, she added.
The CMS announced on Wednesday that non-essential procedures should be delayed until the COVID-19 pandemic ends. Many hospitals had already delayed elective surgeries, which tend to be some of hospitals’ highest-margin procedures. Currently, there is no Medicare inpatient diagnosis-related group for COVID-19 and many admitted patients will require resource-intensive ICU treatment, analysts note.
The rising price of temporary staff is another headwind. Average weekly pay for registered nurses has nearly doubled from $1,700 in January to more than $3,000 in March, according to a new report from NurseFly, which offers software that helps match nurses with providers. Crisis pay rates have jumped to more than $4,400 per week. Meanwhile, many hospitals are reporting shortages of protective equipment for staff.
Distributors have placed more than 700 personalized protective equipment items on allocation due to COVID-19, which restricts ordering when demand spikes to prevent unnecessary hoarding, according to Premier, a consulting and group purchasing organization. In response, the Trump administration aims to stimulate U.S. production of masks and other critical medical supplies and devices through the Defense Production Act.
Here’s a rundown of actions Congress and the Trump administration took last week to aid the healthcare industry.
President Donald Trump signed a second major relief package. It increases federal Medicaid matching funds to the states, and requires public and private plans to cover COVID-19 testing and related office visits without cost-sharing. Lawmakers are working on an economic stimulus and Senate Republicans’ proposal that would suspend the Medicare sequester from May to December, increase add-on payments to hospitals treating COVID-19 patients, expand telehealth and give additional funding to community health centers.
The CMS expanded telehealth for Medicare beneficiaries and cut back HIPAA enforcement. The agency also released guidance calling on providers to cancel elective surgeries and nonessential procedures. Florida and Washington got approval for waivers to fast-track providers’ Medicaid enrollment, ease preauthorization requirements, and provide care in alternative settings.
President Trump invoked the Defense Production Act to increase domestic production of medical supplies including N95 masks. However, an order of 500 million N95 respirator masks may take up to 18 months to be delivered.