Name: California hospitals lose billions to coronavirus; costs could spike
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California hospitals lose billions to coronavirus; costs could spike

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This is a carousel. Use Next and Previous buttons to navigateCalifornia hospital revenue plummeted by more than a third in the first four months of the pandemic as costs to care for coronavirus patients rose, a shocking financial blow that threatens to raise health care prices, according to a recent report.The report, published Wednesday by the California Health Care Foundation, said hospital revenue fell by a cumulative $13 billion from March to June — a 37% reduction from pre-coronavirus levels — as state and local shelter-in-place orders nearly eliminated surgeries and halved emergency room visits. Even with some patients now returning to hospitals as restrictions ease, dire financial losses persist.“It’s a huge shock,” said Glenn Melnick, a professor of health care finance and public policy at the University of Southern California who co-authored the report. “Basically, the bottom dropped out overnight.”Melnick said he’s especially concerned about losses for public hospitals serving low-income and uninsured communities: “The bigger worry is can they survive the immediate impact, stay in business, so that when the dust settles ... are they still there?”The report, based on state data and interviews with officials at around 10 unnamed acute care hospitals, projected that beyond immediate financial losses, the state’s economic recession could reshape health care as jobless Californians lose employer-sponsored coverage and shift to either Medi-Cal or stay uninsured, which means less reimbursement for hospitals. Providers losing revenue could turn to insurance companies for higher payments, which might raise premiums, Melnick said.California hospitals’ financial crisis began under the shelter-in-place orders when they cleared hospitals to make way for coronavirus patients. Profitable surgeries plummeted 90% in March, the report said. Emergency room visits dropped in half.At the same time, providers forked out millions to prepare for COVID-19 patients by increasing bed capacity, staffing units, and buying ventilators and personal protective equipment. As California flattened the curve, only 5% of statewide bed capacity was filled, meaning hospitals weren’t getting paid, the report said.In the Bay Area, giant hospital systems Kaiser Permanente and Sutter Health reported losses of more than $1 billion in the first quarter of this year. MarinHealth, which runs Marin General Hospital, had projected $34 million in revenue for April and saw $17 million instead, CEO Lee Domanico said. Some hospitals cut staffing: At Marin General, 130 of 1,500 employees filed for unemployment.Surgeries are now restarting and hospitals are encouraging patients to return, which will bring back revenue, but long-term economic impacts remain. Researchers estimated that nearly 3 million jobless Californians will lose employer-sponsored health care, causing a drop in commercial insurance coverage from 55% pre-pandemic to 47% post-pandemic, the report said. Medi-Cal patients could increase 15% and the uninsured 28%, the report predicted.Medi-Cal reimburses only a fraction of the amount that commercial insurance plans do, so coverage changes mean less money for hospitals. The change could reduce California hospital revenue by $2 billion compared to pre-coronavirus levels over the next 12 months, the report predicted.More for youMore than 12.3 million Californians used Medi-Cal in April, the most recent data available. Department of Health Care Services spokesman Adam Weintraub said that it's too soon to see whether there's a marked increase because of the pandemic. Susan Maerki, an independent health consultant who co-authored the report, said the spike might not be immediate since some unemployed workers may only be furloughed while retaining health care benefits. Melnick expects the shift won’t start until later this year.Melnick said the projected shift to more Medi-Cal or uninsured patients could push hospitals to ask insurance companies for higher payments. Maureen Tresnak, director of health care strategy with consulting firm Terry Group, made the same prediction.Ratings for the Bay Area and California, updated every 10 minutes“That puts pressure on premiums for commercial coverage, which increases costs to employers and makes it difficult for them to offer coverage,” she said. “There’s pressure all around.”Sutter Health and Stanford Health Care are not renegotiating health insurance contracts or asking for cost increases, spokeswomen said. A UCSF spokeswoman said the hospital system is negotiating one contract with another upcoming on the regular schedule and did not expect to increase charges significantly more than usual.Domanico said MarinHealth will be “looking at new sources of revenue, hopefully talking with the payer community, insurance community about our needs to fund some of these losses ... and tighten our belt where we can to manage expenses based on volumes.” MarinHealth said it was already in negotiations with several of its health plans, unrelated to the pandemic.By the numbers$13 billionRevenue loss for California's hospitals from March to June 202050%+Drop in California hospital outpatient visits from mid-March to mid-May28%Projected increase in uninsured Californians over the next yearSource: California Health Care FoundationHospitals say they need more stimulus funds as the pandemic continues. California so far received $3.5 billion in the initial federal disbursement. The California Hospital Association is also lobbying the state government to add $3 billion for hospital relief in the revised state budget this month.“We need significantly more stimulus money to make up the losses — the whole industry needs it, it’s serious,” Domanico said. “So far, we haven’t seen enough.”Mallory Moench is a San Francisco Chronicle staff writer. Email: Twitter:Ratings for the Bay Area and California, updated every 10 minutes

This is a carousel. Use Next and Previous buttons to navigateCalifornia hospital revenue plummeted by more than a third in the first four months of the pandemic as costs to care for coronavirus patients rose, a shocking financial blow that threatens to raise health care prices, according to a recent report.The report, published Wednesday by the California Health Care Foundation, said hospital revenue fell by a cumulative $13 billion from March to June — a 37% reduction from pre-coronavirus levels — as state and local shelter-in-place orders nearly eliminated surgeries and halved emergency...

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California hospitals lose billions to coronavirus; costs could spike

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