In the midst of a global pandemic, the health care industry is among the most important for obvious reasons. In Alaska, however, hospitals and other health care facilities are in dire straits.
With the up-until-recently mandated cancellation of elective and non-emergent procedures, facilities are feeling the financial burden of decreased services. The decision was made by the state to free up health care infrastructure for an anticipated surge in COVID-19 cases, but with Alaska’s numbers remaining relatively low compared to other states across the country, the cancellations have left patient traffic at a severe low.
This puts health care facilities in an uncomfortable position: wanting to retain staff in the case of a possible spike in cases but hemorrhaging money paying for a full staff when hospitals are seeing less than half the patient capacity in most cases.
The Alaska State Hospital and Nursing Home Association projects there has been a month-to-month decline in revenue of $70 million to $78 million statewide since COVID-19 hit Alaska in mid-March. Even assuming modest increases in traffic as inpatient and outpatient services slowly resume, the association is bracing for what they predict to be an additional crash of nearly $280 million in revenue between April and June.
“That kind of hit in such a short period of time is nearly impossible to rebound from,” association CEO Jared Kosin said.
In Fairbanks, the freeze on services makes up most of the financial loss Fairbanks Memorial Hospital and owner-group Foundation Health Partners has seen over the last month and a half, said Gary Roderick, the foundation’s chief financial officer.
After only half a month of limited services, March brought in 24% less revenue than anticipated. April has yet to be tallied as a whole, but as currently projected the month will see nearly a 50% drop in revenue.
So far, Foundation Health Partners has not had to make any layoffs at the hospital or any of its other Fairbanks-based facilities. Workers have been reassigned to other services as their areas of care have seen a drop off. For example, those working in outpatient care have been reassigned to working one of the foundation’s drive-thru COVID-19 testing stations or fielding phone calls.
It’s fortunate that no layoffs have happened, said Roderick, but a lot remains to be seen. Gov. Mike Dunleavy has lifted his mandate canceling all non-emergent and elective procedures, which may cause one to think patients will be returning to health care facilities for general visits, procedures, tests and surgeries.
But progress in this area will be extremely slow, noted Jeff Cook, foundation board president.
“It is a concern,” Cook said of a still looming possibility of layoffs. “Any other business that faced what we did — can’t do elective surgeries, rapid loss of normal revenue — would furlough people. It’s something we’re trying to avoid if we can.”
Any patient wanting to undergo an elective procedure or non-emergent visit must first be negative on a COVID-19 test. This means a large increase in the number of tests that must be completed. Fairbanks received a new shipment of testing materials Tuesday, Cook said, so supply is not a concern.
An area that is concerning, however, is one that cannot necessarily be tied to facts and figures — the sustained lows in confidence and comfort from the public in returning to routine health care habits.
Even with elective procedures allowed now, it will be a long time before people feel entirely comfortable returning to normal for the medical appointments and procedures that are needed to keep the hospital afloat, Cook noted.
That problem that will likely affect more than just Fairbanks health facilities, Kosin said, sharing the story of a patient elsewhere in the state who avoided treatment of a stroke for three days for fear of exposure to the virus at a health care facility.
Desperate for help
As Alaska hospitals cling to the possibility of a lifeline in additional waves of federal funding, some facilities have had to make hard calls to keep their doors open.
The Yukon-Kuskokwim Health Corp. announced the furlough of 300 employees recently after seeing a 70% drop in patient visits just in the first week of April.
The furloughs will be in place for four weeks. If patient traffic picks up, some employees will be brought back. If not, the furloughed employees will be laid off. But Dan Winkleman, CEO of the corporation, doesn’t anticipate a bounce back financially.
“We do not expect customer census to return to what it was before COVID-19 until a vaccine is available,” Winkleman wrote in a statement announcing the furloughs. “The COVID-19 pandemic is devastating our monthly financials.”
The health group — serving more than 50 rural communities in the Yukon-Kuskokwim Delta area of Southwest Alaska — is not the only health organization that will have to have to make tough calls, said Kosin, the head of the Alaska hospital association.
“It goes way beyond elective procedures. Those are revenue-producing services that are obviously critical to every hospital, and that was a huge impact in stopping those procedures, but the other major impact was the stoppage of pretty much all outpatient hospitals and the trends for inpatient services,” he said. “As people were following shelter-in-place and obviously so, staying away, the number of admissions to hospitals for inpatient and outpatient services just dropped off a cliff.”
At any given time when looking around the state over the last month, hospitals have been operating at less than half patient capacity. Financial funding from the federal CARES Act will help but will not come close to scratching the surface of what many of these facilities have lost.
Of the first $50 billion in federal hospital aid to be distributed, Alaska got about $44 million — half of what state hospitals lost in the first month of canceled services.
“If you do the math with that, the federal aid that’s coming in doesn’t even cover a month of the revenue declines we are estimating,” Kosin said. “So we’re really getting nervous.”
The association sent a letter to the governor last week asking for him to set aside a portion of the state’s share of $1.25 billion in CARES Act funding to help keep hospitals alive. Kosin said the association has not heard any details or confirmation of a plan of that nature.
The portion of state funding that Dunleavy has earmarked for health care services is designed to cover costs related to COVID-19, not the losses in operational costs.
Closures of whole facilities are not off the table, and Alaska is nowhere near out of the woods, Kosin said, adding that more funding is critical.
“Based on what we saw and what we’re projecting to happen with usage of hospital services, we are taking a major hit that could very well result in facilities going under,” he said. “We need access to the funds to make it through this event. It’s just such an abrupt hit that is so significant at one time, you just can’t recover from it. Some may, some will. Some won’t.”
Alaska is one of eight states that sit below the national average of 2 1/2 hospital beds per 1,000 residents. Approximately 21% of Alaska’s hospital beds are not accessible from the road system.
Contact staff writer Erin McGroarty at 459-7544. Follow her on Twitter: @FDNMpolitics.