Mid-Valley, Three Rivers face cash shortages
Two regional hospitals facing severe cash shortages as a result of the coronavirus health crisis have received state and federal assistance, but only enough to carry them through a few more weeks, hospital officials say.
Mid-Valley Hospital in Omak and Three Rivers Hospital in Brewster are among about a dozen hospitals that the Washington State Hospital Association says are particularly hard hit by measures taken to cope with COVID-19, the disease caused by the coronavirus.
Both hospitals — the closest hospitals to the Methow Valley — have seen a significant drop in the number of patients due to orders from the state to postpone elective surgeries and non-urgent medical and outpatient services during the coronavirus outbreak.
“For a hospital like ours, elective surgery is our bread and butter,” said Alan Fisher, chief executive officer of Mid-Valley Hospital.
Last week both hospitals received money from the $2 trillion coronavirus relief bill approved last month by Congress. The bill included $100 billion for hospitals and health care providers.
Fisher said Mid-Valley received a payment of $541,000. Three Rivers Hospital received $307,000, said Jennifer Best, the business development coordinator. Fisher said he was not anticipating any additional federal relief payments from the current relief package. Best said Three Rivers Hospital officials thought there might be additional payments, “but we don’t know when or how much … there’s a lot of confusion.”
Both hospitals have also received state emergency funding totaling about $142,000 for each facility, as well as advanced “disproportionate share” payments, which are federal payments intended to offset hospitals’ uncompensated care costs. In addition, the hospitals received accelerated Medicare payments, but those are loans that must be repaid, Fisher said.
“After the disaster is over, we will have 120 days to pay it back. The difficulty is that now you’ve put the hospital in another pickle by increasing debt,” Fisher said.
For Mid-Valley, the infusion of emergency funding and advanced payments means the hospital had about 45 days of cash on hand to maintain operations, Fisher said last week. “We’ll see what happens after that,” he said. Three Rivers Hospital had about 50 days of cash to cover operating expenses, Best said this week.
Fisher said he is collaborating with Three Rivers CEO Scott Graham and other hospital leaders to work with state and federal elected officials to get financial help. “There’s a lot of cooperation at the federal level and locally with other hospitals. We’re in the same boat,” Fisher said. “I’m optimistic,” he added.
Mid-Valley and Three Rivers hospitals are used to operating on the financial edge. “We manage by looking at accounts receivables … and examine every payable that goes out,” Fisher said. “It boils down to good cash management.”
But good cash management can’t compensate for the loss of elective surgeries and non-urgent medical services that provide revenue to support the hospitals’ emergency rooms and other operations. Even emergency room visits have dropped off, probably in response to social distancing guidelines, Best said.
“Even when social distancing requirements go away and there are less [COVID-19] cases being diagnosed, it will probably take time to see volumes increase,” Best said. “People may be unemployed and without health insurance, or reluctant to come to a hospital” because of concerns about the virus.
To reduce costs at Mid-Valley, Fisher said he has taken a 28% pay cut, a hospital staff physician has taken a 25% pay cut, and a clinic manager has taken time off without pay.
At Three Rivers Hospital, the staff is being sent home from shifts early when possible, and “salaried staff such as myself or administration can opt to take a day off without pay — nearly everyone is doing that,” Best said.
Three Rivers Hospital and Mid-Valley Hospital are critical access hospitals, which serve residents who would otherwise be a long distance from emergency care. Rural hospitals across the state are being particularly hard by restrictions on elective surgeries and outpatient services, according to the Washington State Hospital Association.
Three Rivers Hospital is seeking a one-year excess property tax levy, which is not connected to the current financial stress of coronavirus, in the April 28 special election, Best said. The proposition asks voters whether to approve a one-time total of about $750,000 to be collected next year. The funds would cover the costs of emergency room operations and physicians. The hospital’s Board of Commissioners voted in February to place the levy on the ballot.
Preparations have been made at both hospitals to treat COVID-19 patients, including developing procedures to protect staff and patients and securing protective gear for medical staff, although the hospitals have not admitted any COVID-19 patients to date. The hospitals have also developed plans to transfer COVID-19 patients needing critical care to larger hospitals like Confluence Health’s Central Washington Hospital in Wenatchee.
Confluence Health is also feeling the financial pain of postponing elective patient care, and announced salary reductions last week for just over 600 of its 4,200 employees to offset lost revenue.
“The decision to proactively postpone elective patient care was the right one, but the suspension of elective procedures and decline in visits to our primary care practices and urgent care center have resulted in financial challenges,” said Peter Rutherford, Confluence Health chief executive officer.
“At the same time, we have seen a significant increase to expenses as we’ve made critical investments to expand community testing and realign our facilities and care teams to treat COVID-19 patients,” said Rutherford.
Without making financial adjustments, Confluence Health would see a loss of $26 million in operating costs, he said. “We are committing $20 million of reserves to help cover costs.”
The pay reductions include a 25% cut in Rutherford’s CEO salary, 10% cuts for executive leadership positions, 7.5% for senior leadership employees, 5% for directors, 3% for managers, and 7-10% for clinicians on production-based salaries.