COVID-19 wearing down hospitals’ bottom lines

ATLANTA — A new wave of coronavirus patients that began showing up at Georgia hospitals early last month has prompted shortages of staffing and bed space and strained supplies of sanitation items like disinfectant wipes.

But that’s only the most obvious manifestation of what the COVID-19 pandemic is doing to hospitals large and small across the Peach State.

Less obvious but equally if not more daunting is the long-term consequences on hospitals’ finances.

“In one word, it’s devastating,” said Ethan James, executive vice president for external affairs for the Georgia Hospital Association. “It’s scalable for the big hospitals that may have had a good amount of reserves before this started. … Smaller hospitals are going through their reserves quicker.”

The effect of the pandemic is having the most serious impact on rural hospitals.

In the most severe example, the Southwest Georgia Regional Medical Center in Cuthbert recently announced plans to close its doors this fall. It will become the eighth rural hospital in Georgia to close in the last decade, although some have reopened with fewer services.

“There are probably a dozen (more) that are having a difficult time,” said Monty Veazey, president and CEO of the Tifton-based Georgia Alliance of Community Hospitals. “They spent down their reserves. They don’t have a bottom line.”

As the number of hospital closures since 2010 indicates, financial struggles among rural hospitals predate COVID-19. Historically, they have been plagued by a shortage of paying patients.

“Their patient mix is high indigent, high Medicaid, high uninsured and underinsured,” Veazey said. “They’re living off cash flow and trying to make a weekly payroll.”

Jimmy Lewis, CEO of HomeTown Health Care, which represents rural hospitals in Georgia, said his organization was called upon to help six cash-strapped hospitals make payroll back in February and early March, just before the coronavirus outbreak gained a grip on the state.

“When the pandemic hit, they quit doing elective surgery,” Lewis said. “The financial impact was immediate and awful.”

Hospitals’ financial straits eased somewhat when Gov. Brian Kemp partially reopened Georgia’s economy in late April. They resumed revenue-generating elective surgery and, at about the same time, a pipeline of federal assistance opened up when money from a coronavirus relief package Congress had passed in March began to flow.

“All of a sudden, the hospitals had cash,” Lewis said.

With the congressional relief measures helping to relieve hospitals’ financial concerns for the time being, the most serious problem has become coming to grips with the surge of COVID-19 patients streaming into hospitals since the pandemic took a turn for the worse in early July.

The increased demand is affecting large urban hospitals as well as their rural counterparts. Atlanta-based Emory University Hospital has seen more COVID-19 patients treated in intensive care in recent weeks than during the pandemic’s earlier peak in April, said Jonathan Lewin, president and CEO of Emory Healthcare.

“If this continues for a few months, it’s going to be concerning,” he said. “There are a lot of hospitals that are going to be in very, very financially challenged times.”

In some parts of the state, hospitals are short on bed space. Hospitals serving the regions surrounding Athens and Tifton have run out of beds dedicated to intensive care, forcing those hospitals to move beds normally dedicated to other patients into ICU units or transfer them to other facilities.

Lewis said the surge of COVID-19 patients also has made staffing a huge problem for the rural hospitals.

“We don’t have enough staff to handle all that’s coming,” he said.

While the federal money has been helpful, it’s not a long-term fix. For one thing, there’s no guarantee more will be forthcoming, with Republicans and Democrats in Congress far apart on a new relief package.

“It’s been a Band-Aid. That’s all,” Veazey said. “It’s propped up some (hospitals) a little while longer. It’s not going to be a solution.”

Veazey said a more reliable solution would be expanding Georgia’s Medicaid program. To date, 38 states have expanded Medicaid coverage through the Affordable Care Act then-President Barack Obama pushed through a Democratic Congress a decade ago.

“We would need a Medicaid expansion to survive,” Veazey said. “(But) I don’t think that’s going to happen anytime soon.”

Kemp and Republican leaders in the General Assembly have resisted expanding Medicaid based on the Obamacare model. Instead, the legislature has authorized the governor to seek a federal waiver to expand Medicaid through a more conservative approach than the Affordable Care Act offers.