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Iowa Hospitals Could Lose $1.4 Billion From COVID-19

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Daan Stevens
/
Unsplash
Iowa hospitals could lose more than $1 billion because of COVID-19, according to a new analysis.

Iowa hospitals could lose $1.4 billion in revenue between March and September due to the COVID-19 pandemic, according to a report commissioned by the Iowa Hospital Association.

The report, which was done by Minneapolis accounting firm CliftonLarsonAllen, found many of the state’s hospitals were hardest hit in March and April, when the state barred non-essential surgeries and procedures. 

It found during those months, 90 percent of the state’s hospitals were operating in the red at an operating margin loss of nearly 11 percent.

“We've had a 52 percent decline in ambulatory surgeries, 37 percent decline in inpatient surgery surgeries, 21 percent  decline in inpatient discharges, 29 percent required outpatient visits, which means that you have ongoing expenses and overhead of managing the facilities, said Kirk Norris, CEO of the Iowa Hospital Association.

At a press conference, Norris said Iowa hospitals have already received millions in federal support from stimulus bills, CARES Act and Paycheck Protection Program, but it still won’t cover predicted losses.

Orange City Area Health System CEO Marty Guthmiller said the CARES Act funding his rural hospital has received so far has only covered operating expenses for 36 days. He said his hospital lost $900,000 in the month of April and has more than 500 employees, so it doesn’t qualify for the paycheck protection program.

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Credit Iowa Hospital Association
An analysis by a Minneapolis accounting firm commissioned by the Iowa Hospital Association found Iowa hospitals could lose more than $1 billion from COVID-19

Guthmiller predicted some of Iowa’s rural hospitals will close due to the pandemic.

“While it's difficult to predict, it's relatively certain that we will lose some hospitals in Iowa simply because they do not have the capacity to withstand a downturn in revenue,” he said.

UnityPoint Des Moines CEO David Stark said his hospitals are still losing a lot of money because of  COVID-19 from doing things like staffing entrances to screen for the virus.

“We're staffing every one of our facilities 24 hours a day and taking temperatures and asking screening questions. For our organization alone, that's a $2 million expense that we certainly didn't plan on this year,” he said.

Stark said his hospital is also losing revenue as it continues to limit procedures and set aside beds for COVID-19 patients as they’re still seeing “a fairly high elevated level of COVID positive inpatients in our facilities.”

He said the hospitals’ revenue was down by 41 percent in April after cutting all elective procedures.

“'I’ve been with the organization for 24 years, it was the first month that I can remember that we had a negative operating margin,” he said. “We lost money in the month and that is with inclusion of the first round of the CARES Act money.”

Stark said May revenue is projected to be down by 21 percent.

In order to offset losses, UnityPoint has cut management salaries by 10 percent temporarily, cut its capital budget in half to preserve cash and furloughed employees, he said.

Norris said his organization has not tracked the number of layoffs and furloughs at hospitals due to the pandemic, but said half of most hospitals’ expenses are salaries and benefits and he expects staffing cuts to hit most hospitals.

“When your revenues have dropped off this steeply, your services dropped off as steeply as they have, you don't have very many places to go,” he said. “And then pretty quickly, it's people on the front lines who are at risk for losing employment.”