Kentucky hospitals say pandemic has cost them $1.34 billion, net

By Lisa Gillespie
Kentucky Health News

Kentucky hospitals say they have had collective financial losses of $1.34 billion due to the covid-19 pandemic, with the biggest hit from elective procedures that were canceled or postponed.

In a new report, the Kentucky Hospital Association tracks the hits hospitals have taken and the federal assistance they got to stay afloat. They say federal relief money, not counting almost that much in loans from Medicare, reduced their losses by $1.03 billion, and they reduced their expenses by $200 million.

“While it sounds like we’ve gotten a lot of money, which of course we have, the losses are much greater than that,” KHA President Nancy Galvagni said.

The report says the losses came mainly from fewer patients seeking care not related to covid-19, new limits on hospital capacity in case of a local outbreak, and stockpiling supplies like personal protective equipment.

Elective procedures were put on hold during the three months Kentucky was in lockdown mode. Galvagni said the procedures include anything that could wait without a patient deteriorating or dying, such as knee replacements and preventive services.

“There are procedures that hospitals are able to make a margin on, and they subsidize all the money-losing services that hospitals provide,” Galvagni said. “That period of time when we didn’t have that volume, we’re never going to recoup those losses. That’s just money out the door.”

The pandemic has added other burdens. Hospitals must have 30 percent of their beds at stand-by in case of a local outbreak, and treatment of a covid-19 patient is much more expensive than other patients. KHA cited research indicating that hospitals lose between $1,200 to $8,000 per day on covid-patient care that won’t be paid by insurers.

Another big question that’s weighing on hospitals is the money they owe the federal government. Hospitals were able to request six months of advance payments from Medicare, but at some point Medicare will have to recoup  that money. KHA is asking Congress to forgive the loans.

Galvagni said she didn’t know many hospitals had received those advance payments. A Medicare report said Kentucky hospitals and other health-care facilities got $1.16 billion; nationally, hospitals got almost 85% of the money; if that percentage held true in Kentucky, the state’s hospitals were advanced about $950 million.

The KHA report says the pandemic has put rural hospitals at higher risk of closure. Kentucky has 68 rural hospitals, which compose 56% of hospitals in the state, employing more than 24,000 people.

“Those hospitals that were already struggling, could be even more struggling,” Galvagni said.

Most rural-hospital patients are covered by Medicaid, the federal-state program that covers people with incomes up to 138% of the federal poverty level. These hospitals already operate under tight margins because Medicaid typically pays less than commercial insurance, Galvagni said: “It’s really a reflection of the payer mix of our hospitals in those areas where they’re serving a vulnerable population.”

In the report, KHA asks the Kentucky legislature to not increase a health-provider tax that would mean hospitals give more money to the state to help fund Medicaid.