On New Years Eve, just as the Covid-19 outbreak in Los Angeles was at its worst, all 451 of Olympia Medical Center’s exhausted employees learned they would soon lose their jobs. After 74 years, the hospital closed for good on March 31st, leaving residents of the surrounding community — poor and mostly people of color — without a place to see a doctor.
And it isn’t the only hospital closing.
At least 47 hospitals have closed or filed for bankruptcy in the last year, and there will surely be more to come. Last June, the AHA predicted hospitals would lose over $323 Billion in 2020 due to the pandemic. These losses will negatively impact the health of communities as hospitals cut back on staff and services. But for many hospitals, the revenue lost from patients staying home combined with the costs of PPE and Covid-19 treatment will be too much to bear.
Hospitals serving poor urban communities, like Olympia, are particularly at risk for closing. They treat patients who can’t afford to go anywhere else — the same patients who are often more exposed to the virus and more likely to get severely ill if infected. As a result, these hospitals were hit hardest by the pandemic and received little compensation for their care. Many of these hospitals are in Black and Hispanic communities, and their closing would certainly widen racial health disparities.
But it’s not just urban hospitals at risk. A staggering 40% of America’s rural hospitals are at high or immediate risk of closing. Closures here would leave many residents without a place to go for emergencies, lab tests, imaging or even primary care within a reasonable drive.
The shift to value-based payment models will put even more hospitals at risk of closing. As the Biden administration moves to increase participation in these models, more of providers’ revenue will depend on their ability to improve the health outcomes of their patients — a tall order when 41% of patients are avoiding needed care because of the coronavirus.
Hospital closures are always harmful for the health of residents in their community. For example, in rural Texas counties without hospitals, residents are dying from Covid-19 at rates 20% higher than in counties with hospitals. A closing hospital also devastates the local economy: in 2018, hospitals supported one in nine jobs.
So what will it take to save America’s hospitals? Here are a few ideas:
Intervention from Congress
The $100 billion in aid supplied by the CARES Act has helped keep hospitals afloat, but it won’t be enough for many hospitals. What’s more, evidence shows the relief isn’t reaching the providers that need it most.
A recent ProPublica report found that confusing and contradictory guidelines have left many smaller providers locked out of the relief they needed. Many were unsure what they could spend the aid on, and didn’t want to risk having to return money they no longer had.
We have an opportunity to do better. The CARES Act came together in a frantic two weeks when the gravity of the pandemic first set in. The lawmakers and lobbyists who wrote it were no doubt just as distraught and confused as the rest of us. For future aid packages, we’ve now had time to learn which hospitals need the aid most and how to get it to them.
There are at least 897 hospitals at high or immediate risk of closure in rural areas alone. To prevent further disparities in health outcomes, the next round of relief should prioritize hospitals in vulnerable communities like these, as well as the safety net hospitals in poor urban areas that are also struggling to stay open.
Legislators should hear from financial decision-makers at these hospitals to better understand their financial needs and difficulties accessing previous rounds of aid. Relief should then be targeted with criteria based on hospital needs and local service level shortages, without imposing burdensome hurdles that discourage understaffed hospitals from accepting aid.
Reducing Uncompensated Care
The pandemic has led to widespread job losses, and an estimated 14.6 million people have lost their health insurance as a result. This is unquestionably bad for patients, but also for hospitals. Patients who can’t afford their care will be discouraged from seeking care they need, denying hospitals revenue initially and costing them more in the long run, as patients deteriorate from lack of care and require more costly care in the future that they can’t pay for.
Already, 48% of hospitals have reported an increase in uncompensated care during the pandemic. With all the other financial pressure on hospitals, this is not sustainable — particularly for hospitals in economically depressed communities that are most affected.
Fortunately, the Biden administration has pledged to expand Medicaid and reopen the ACA exchanges, giving the uninsured and underinsured a chance to secure better coverage. However, this will only stop uncompensated care if people who need additional coverage enroll.
As an industry, we need to leverage the data and analytics tools at our disposal to identify those that are both underinsured and at risk of requiring care they can’t afford, and target our outreach to these patients to help them enroll in coverage or financial assistance. A data-driven approach can make this outreach more efficient, but it will require more data sharing to be effective. The new interoperability standards for health IT finalized by ONC last year should help with this.
New Efficiencies in Care Delivery
Our health system was not built to sustain the intense financial pressure we’ve seen throughout the pandemic. To recover from it, we can’t go back to the way we operated before. We need to rethink how we deliver care to not only see more patients but to see them proactively, before they are in dire need of costly interventions.
Telehealth should be part of the solution. Now that providers everywhere have been forced to use it, we’ve seen how effective it can be, many providers are not looking back. Telehealth allows providers to increase their patient volumes — without inconveniencing patients with taking time out of their day, traveling to their appointments, or sitting in the waiting room.
However, to make telehealth a viable alternative to in-person visits, we need stronger telehealth parity regulations to ensure providers can be reimbursed fairly for telehealth visits. If hospitals are losing money on telehealth, then it won’t help to keep them open.
An added benefit of telehealth is that it can be used as a triage tool to re-engage the 41% of patients who deferred care last year. With a simple phone or video call, care teams can find out if patients are on the right track or if they should come in for an in-person check up. Patients can then be directed to appropriate care settings for elective procedures or disease screenings, generating additional revenue for providers.
Deferred care poses a severe financial risk for value-based care providers in particular, who will be penalized for patients who suffer worse outcomes as a result. But insurance providers and provider-sponsored health plans are also at risk. If their members with chronic illness deteriorate, they will require more costly care and larger payouts. To reduce their financial risk, they need to be proactive in targeting early interventions for the patients most at risk.
We’re still deep in the darkest phase of the pandemic. But when hospitals can safely reopen for elective procedures and routine visits, providers need a better way to identify who is at risk of deteriorating and know what can be done to prevent them from needing an avoidable hospital admission or ER visit. Here too, data and analytics will play a role in targeting outreach to the right patients, and helping outreach teams anticipate their patients’ needs.
Vaccines are here, and with that, exhausted clinicians can finally see a glimmer of light at the end of a long, dark tunnel. But if we don’t act now, many of their hospitals may not survive to see the end of the pandemic, or to serve their communities in its aftermath.
About John Frownfelter, MD, FACP
John is an internist and physician executive in Health Information Technology and is currently leading Jvion’s clinical strategy as their Chief Medical Officer. With 20 years’ leadership experience he has a broad range of expertise in systems management, care transformation, and health information systems.
Dr. Frownfelter has held a number of medical and medical informatics leadership positions over nearly two decades, highlighted by his role as Chief Medical Information Officer for Inpatient services at Henry Ford Health System and Chief Medical Information Officer for UnityPoint Health where he led clinical IT strategy and launched the analytics programs. Since 2015, Dr. Frownfelter has been bringing his expertise to healthcare through health IT advising to both industry and health systems.
His work with Jvion has enhanced their clinical offering and their implementation effectiveness. Dr. Frownfelter has also held professorships at St. George’s University and Wayne State schools of medicine, and the University of Detroit Mercy Physician Assistant School. Dr. Frownfelter received his MD from Wayne State University School of Medicine.