This spring, North West hospitals and health systems are reporting some of their biggest financial losses since the COVID-19 pandemic began. In some cases, the need to repay loans issued by the federal government at the start of the pandemic contributes to their financial difficulties.
Providence Health Services, based in Renton, Wash., lost $510 million in the first quarter of 2022. Portland-based Oregon Health & Science University lost $64 million in the current fiscal year, including a $20 million loss in February alone.
And St. Charles Health System in Bend lost $21.8 million and announced layoffs.
All three health systems cited the impact of the omicron wave, inflation, and the healthcare workforce crisis as reasons for losing money on their operations.
Most hospitals have tapped into money from pandemic relief, the CARES Act and other sources, to partially offset these losses.
But a lesser-known aid program, the Medicare Accelerated and Advance Payments program, offered interest-free short-term loans, not grants. And now the bills are coming due at a time when hospital costs are rising rapidly and revenue from patient stays and surgeries is growing more slowly.
At the start of the pandemic two years ago, hospitals and primary care providers in Oregon received more than $1.1 billion in advance payments from Medicare, according to records shared by the Hospital Association and Oregon Health Systems. The idea was to maintain cash flow during the first crisis months of the pandemic, when elective surgeries were canceled, by paying hospitals in advance for the services they would provide to Medicare patients at the ‘coming.
The program has been used in the past to support hospitals affected by wildfires and hurricanes. The idea is for hospitals to be able to repay the advances once the crisis has passed and operations have returned to normal. But the pandemic is dragging on – and hospitals and healthcare systems are still feeling the effects. At the same time, the federal government wants its money back so that it can keep medicare funded.
Based on the number of Medicare patients they serve, PeaceHealth (headquarters in Vancouver, Washington), OHSU, and St. Charles Health System had the largest advances of Oregon systems that took out loans: $214 million, $137 million and $94 million respectively. .
Congress has set the repayment deadline and has already extended it once. The hospitals have put pressurewithout success, for the loans to be cancelled.
The federal government is trying to recover the loans
Last March, a year after the first payments were made, the US Department of Health and Human Services, which oversees Medicare, began recouping those cash advances by paying health systems 25% less for claims. Medicare reimbursement. Earlier this year, in accordance with the schedule established by Congress, they began paying only 50% of the bill for any service provided by the hospital to a Medicare-covered patient.
Hospitals may also choose to reimburse Medicare directly for loans to avoid having their reimbursements reduced.
The Lake Health District in remote Lake County, Oregon, received about $5.2 million in Provider Relief Fund grants and a $7 million loan from Accelerated and Advance Payments, which he is currently reimbursing.
CEO Charlie Tveit said the Lake Health District is reimbursing Medicare even as it considers layoffs or cuts to services, including a long-term care facility and a small hospice program.
“We are looking at that. We cannot continue to lose money the way we have been,” he said.
Tveit says the high cost of hiring temporary employees through an agency, for critical positions that Lake Health has been unable to fill, is the main driver of the losses. Most hospital systems are short of nurses and pay high salaries for certified nurses to come to their hospital for short stays. But, as Lake Health and others have discovered, it can quickly get expensive.
Lake District did not spend the advance payments it received from Medicare because it seemed likely the loan would have to be repaid. Still, Tveit said it’s been frustrating returning federal aid — especially when he can’t predict the impact COVID-19 could have on his future operations.
“We have no idea what’s going to happen this fall,” Tveit said. “It could come back with a vengeance.”