OAHHS Hospital Voice Fall/Winter 2020

16 » A magazine for and about Oregon Community Hospitals. A SNAPSHOT OF THE FINANCIAL IMPACT OF COVID-19 ON OREGON HOSPITALS By Elyssa Tran, Apprise Health Insights In mid-March of 2020, with the Centers for Disease Control and Prevention projecting as many as 21 million COVID-19 patients requiring hospitalization across the U.S., hospitals and health systems across Oregon sprung into action to comply with Governor Brown’s executive order to cancel all elective and non-urgent health care procedures that require personal protective equipment (PPE). This development, along with steps taken to enhance capacity for a surge of patients, had immediate and significant impacts on hospital patient volume and expenses. This synopsis outlines initial estimates of the impacts between March and June 2020. Before the pandemic, Oregon hospi- tals averaged 28,300 inpatient visits and slightly more than one million outpatient visits each month. As suppression efforts to address COVID- 19 took effect, patient volume and associated revenue fell precipitously. In the two-month period following the discontinuation of elective and non-urgent care order, April and May, outpatient visits decreased by 32 percent compared to the same period in 2019. Likewise, emergency depart- ment (ED) visits plummeted by 35 percent. Statistics for June outpatient visits show a small increase compared to June 2019 after the pause on scheduled procedures was lifted May 1 as patients began to come back for necessary procedures that they had delayed, but ED visits were still substantially down. Meanwhile, hospitals’ expenses have increased with COVID-19 surge preparation due to the implementa- tion of new care procedures, the purchase of hard-to-find and now expensive PPE, and other intensive care unit (ICU) equipment. Due to mitigation measures taken by hospi- tals and no substantial surge in COVID-19 patients during this period, salary and benefits for hospital physicians and other workers, which generally compose 50 percent of hospitals’ operating expenses, have not changed substantially in Oregon. With visits and operating revenue declining overall, along with added COVID-19-related expenses, profit- ability at Oregon’s acute care hospitals has also declined. Before the pan- demic, Oregon hospitals averaged $1.1 billion in monthly total net patient revenue for inpatient and outpatient services. This has dropped to $957 million per month for the first four months of the pandemic—March, April, May and June 2020. This is a reduction of 16 percent from pre- COVID-19 levels. Likewise, the median operating margin of Oregon hospitals, which was about 4.75 percent in CY 2019, dropped to 2.0 percent for the March through June 2020 period. In summary, this early assessment shows that there has been a substantial and unexpected short term financial shock to Oregon hospitals from COVID-19. Future analyses will explore other influencing factors such as the increasing Medicaid caseload and possible shifts in overall hospital payer mix, and generally, longer-term effects on hospitals’ viability in the broader economic context. Notes: All utilization and financial data for this analysis is fromDATABANK, data submitted byOregonhospitals, under a state mandate, to Apprise Health Insights, the Data & Analytics subsidiary of the Oregon Association of Hospitals &Health Systems. Median Operating Margin Percent by Quarter 6% 4% 2% 0% -2% 2019 Q3 2019 Q4 2020 Q1 2020 Q2 DRG Rural All Hospitals