The sound of the other health-care industry shoe beginning to drop reached into the Monadnock Region last week, when Monadnock Community Hospital in Peterborough announced layoffs due to financial strains from the ongoing COVID-19 pandemic. Not only concerning for the hospital and those it serves, the announcement once again lays bare how broken the nation’s health-care financial model is.
The dire effect of the pandemic on the nation’s hospitals has been clear since its spread began early this year. To deal with the surge of COVID-19 patients and to protect other patients and their workers, hospitals suspended elective surgeries and other non-essential services. These are decisions we want our hospitals to be able to make — take steps in the best interest of public health, patients and health-care workers.
The impact, though, was — and remains — financially devastating. Elective procedures are the profit generators for hospitals and have long subsidized the costs of other essential care that generates a loss. With the spigot of their most profitable revenue streams turned off, many hospitals responded with such cost-cutting measures as furloughs and pay reductions, hoping they could buy time until pandemic financial constraints eased.
In Monadnock Community’s case, the hospital in early May announced 90-day furloughs for about 20 percent of its workforce and pay cuts for physicians, managers and other senior staff. Similar steps were taken at facilities around the state and the country. For example, this spring Lakes Region General Hospital in Laconia furloughed 500 workers, Manchester’s Catholic Medical Center furloughed 423 and the SolutionHealth system anchored by Elliot Hospital in Manchester and Southern New Hampshire Medical Center in Nashua furloughed about 650.
Here in Keene, Cheshire Medical Center, despite reporting similar financial pressures from steep revenue declines, was able to leverage its position as part of the extensive Dartmouth-Hitchcock system to avoid furloughs and layoffs, a spokesman told The Sentinel in early May. But across the country, more than 260 hospitals furloughed workers this spring in response to the pandemic, according to the industry publication Becker’s Hospital Review.
Hospitals also bought time with federal coronavirus relief aid coming directly from Washington and through the states. Monadnock Community, for instance, has received $6.74 million from the Provider Relief Fund administered by the U.S. Department of Health and Human Services, according to government data, and in late June the state awarded it $1.28 million of federal CARES Act funds.
The belt-tightening hospitals undertook and the relief aid, however, served only to narrow the gap. In early May, a Monadnock Community spokeswoman said the federal funds it had received was not enough to cover even one month’s losses. At the same time, Cheshire Medical’s spokesman said it was losing $2 million weekly, a pace that would quickly eat up the almost $12 million that government data indicate it has received from the HHS Provider Relief Fund.
The hope has been that an eventual resumption of elective surgeries and other more profitable services would restore balance to what had been the pre-pandemic financial model and enable the hospitals to reinstate furloughed workers. As Monadnock Community’s announcement last week makes clear, that hasn’t happened. While the hospital said it has brought back about 75 percent of those it furloughed, President and CEO Cyndee McGuire told the Monadnock Ledger-Transcript that its losses were still mounting at almost $2 million per week, necessitating last week’s layoffs of 21 employees. On the same day last week, Catholic Medical announced that despite the resumption of previously suspended services, it was laying off 71 staff members and projecting a $40 million loss this fiscal year. With the COVID-19 cases surging in many parts of the country, and with patients demonstrating a tendency to defer, even if sometimes unwisely, non-essential services out of caution, expect similar announcements from the nation’s hospitals to continue.
Responding to the financial pressures has led health-care providers to find innovative ways to reduce costs, such as through telemedicine, which should be beneficial even beyond the pandemic. We also continue to believe a move to an accountable care model — which rewards providers for keeping patients healthy and takes incentives away from expensive services — would be a forward step for the nation’s health-care system.
But until the nation — in particular the federal government — figures out how hospitals and other facilities can be adequately compensated and not face financial peril for providing essential services, the sound of that other shoe dropping will continue to resound throughout the country.