Hospitals across the U.S.
are facing financial ruin.
As the coronavirus spreads across rural America, many struggling
hospitals are seeing a massive loss of revenue after they were forced
to cancel profitable, non-emergency medical procedures.
At the same time, many of those facilities are in urgent need of
pricey ventilators to keep their Covid-19 patients alive.
So I do believe that a lot of hospitals are holding off on ordering
ventilators because of the financial implications of this.
And again, I think this is an issue with smaller hospitals.
For them, this could bankrupt many of those smaller hospitals.
In Mississippi, 48% of rural hospitals are at serious financial risk,
according to a study by Navigant, a professional services firm.
Month of April, it's going to be devastating.
Our hospital only volumes are down 40%.
Our revenues are down 40%.
I don't know what the volumes are down but, if you're a rural
hospital and you lost money last year and you're in that, you're in
the same mode that you were.
This crisis needs to end today, for those guys to survive.
As of May 3rd, 2020, more than 86% of rural counties reported Covid-19
cases totaling more than 66,000 people.
And as the outbreak spreads, to save money, rural hospitals are
furloughing workers like nurses and support staff at a time when
health care professionals are needed the most.
The question is, will rural hospitals go bankrupt buying ventilators?
Ventilators a critical resource in the battle against coronavirus are
in short supply.
Ventilators help patients who cannot properly breathe by pumping air
into their lungs.
Ventilators are used for the most severe coronavirus patients.
The patients who lungs just cannot function on their own.
Patients that can breathe by themselves and are going into
respiratory failure. But ventilators aren't a cure-all, according to
a study published in the Journal of American Medical Association.
The death rate for Covd-19 patients on ventilators in the New York
City area was almost 90% at the start of the coronavirus pandemic.
There were about 160,000 in U.S.
hospitals and less than 13,000 in reserve in the national stockpile.
During a March, 31 2020 press conference, New York Governor Andrew
Cuomo said that all 50 states and FEMA were in a bidding war with
each other, trying to acquire ventilators and were, in effect,
driving up the price.
We're all trying to buy the same commodity, literally the same exact
item. So you have 50 states competing to buy the same item.
We all wind up bidding up each other and competing against each
other. Where you now literally will have a company call you up and
say, well California just outbid you.
It's like being on eBay with 50 other states bidding on a
ventilator.
To make up for the shortfall, at least one hospital in New York City
started putting two patients on a single device.
Unlike their urban counterparts, rural hospitals have even fewer
ventilators in stock.
And so for roughly 60% of the nation's rural hospitals, they have one,
maybe two ventilators onsite.
Now, some of the larger ones will have up to four.
But again, we're talking at a max, four ventilators onsite.
Ventilators or a pricey piece of equipment for cash strapped rural
hospitals. The average cost of a ventilator is about $25,000, and
high end machines can cost up to $50,000.
Since the Covid-19 outbreak, several companies have ramped up
production, hiring more employees and moving workers to around the
clock shifts. Medtronic, a medical device company, increased
production of its high performance ventilators by more than 40% and
expects a five fold increase in production by the end of June.
Today, we're at 300 a week, which is about double what we had in
January when this pandemic first started.
By the end of April, we'll be at 400 a week.
By May, we'll be at 700 a week.
And then by June, a thousand a week showed great progress in ramping
up production. The company also plans to start selling a lower cost
ventilator in the U.S.
for under $10,000 that it offers in other countries.
Philips said it would double the production of its ventilators and
increase production to 4,000 ventilators a week by the third quarter
of 2020. And automakers are involved in the effort too.
In March 2020, General Motors and Ventec Life Systems, announced
plans to mass produce 30,000 ventilators.
In April 2020, the first machines began arriving at Chicago area
hospitals. Ford Motor Company announced a collaboration with G.E.
Healthcare on March 30th, 2020, saying it would produce 50,000
ventilators within 100 days and up to 30,000 a month after if needed.
But with the coronavirus quickly making inroads into rural America,
hospitals might not have time to wait.
Usually, it takes 60 days to ramp up production.
So even hypothetically, if a small rural hospital had the cash to
purchase, let's say, five ventilators today, when those could be
delivered is anyone's guess.
A typical rural hospital has 25 beds, 58 days of cash on hand, and
usually between zero and five ventilators.
While ventilator production is on the rise.
Analysts think it's unlikely rural hospitals will be purchasing the
machines anytime soon.
Well, I don't think they're going to be buying them.
I'll be honest with you.
They just do not have the money to do so.
I mean, if they can get them, whether it's from a stockpile or a
donation, that's one thing.
But they're really not going to be putting out the money because they
don't have the ability to purchase these in small rural hospitals.
Instead, what could spell financial ruin for many small town American
hospitals is the loss of a big chunk of their annual revenue.
We project 400 rural hospitals to be at risk and without substantial
federal, state intervention in this crisis.
It's reasonable to expect hundreds of rural hospitals to close over
the next six months.
Rural hospitals had a number of problems that preceded the coronavirus
pandemic. Prior to the outbreak, about half of rural hospitals
operated in the red.
Rural hospitals tend to have lower patient volume than their big city
counterparts and treat people that are generally older and sicker and
rely heavily on Medicaid and Medicare.
And hospitals in states that didn't expand Medicaid under the
Affordable Care Act are in a weaker financial position too, according
to studies. Texas is one of several states that refuse to expand
Medicaid under the Affordable Care Act, forgoing an estimated one
hundred billion dollars of federal funding in the 10 years to 2029.
The state has already seen 15 hospitals close since 2010.
Covid-19, has only added to those problems.
Hospitals make a big chunk of their revenue from high ticket services
like cardiac surgery and cancer care, and a lot less money from
things like intensive care units and Medicaid patients.
To prepare for the influx of coronavirus patients, medical facilities
across the country cancel most elective procedures.
When you're talking about rural hospitals right now, it's really a
tale of two different cities, if you would.
The vast majority of them have stopped all elective procedures and
they're losing money right now.
In an effort to stem their financial losses, more than 150 hospitals
and hospital systems in the U.S.
have furloughed tens of thousands of workers like nurses and support
staff. And at a time when hospitals are needed more than ever, some
rural hospitals are shutting down completely.
It is safe to say more than half of the nation's rural hospitals have
either furloughed or reduced payroll at this time.
That is a safe estimate.
It's probably more along the lines of 70 to 80 percent of the rural
hospitals have had to do this.
On April 15, 2020, Decatur County General Hospital in Parsons,
Tennessee, closed, becoming the 14th rural hospital in the state to
shut down in the past eight years, according to Beckers Health Care.
The following week, William Memorial Hospital in southern West
Virginia closed its doors, citing a decline in volume from the
current pandemic as a reason for the closure.
And since January 2005, 170 rural hospitals in the U.S.
have closed.
King's Daughters Medical Center is a 99 bed hospital in Brookhaven,
Mississippi, about two hours north of New Orleans.
Lincoln County, Mississippi, where the hospital is located, has 155
confirmed coronavirus cases and 12 deaths from the disease, as of May
6th, 2020.
Monday, we had 19 patients in the hospital.
Today, we got about 10 or 11 patients.
We still have four patients on the vent.
Monday we had five patients on the vent.
After elective procedures were canceled.
The hospital experienced a 30% drop in revenue, comparing income from
the first half of March to the last half of the month.
I expect us to lose a million and a half dollars maybe two million
dollars. That's I don't hardly make that much in a year.
And to lose that much in a month is hard to imagine.
To save money, the hospital furloughed over 75 employees and reduced
the hours for almost 100 more, saving $250,000 a month.
One thing to be concerned about is when you look at the current
finances of rural hospitals.
They're laying off staff, they're furloughing staff, they're cutting
salaries, they're struggling to keep their doors open, they're
currently struggling to make payroll.
So the obvious question is, are they in a position now to purchase
ventilators? That's an unknown that we don't know at this point.
It's going to be highly unlikely that they're going to look towards
purchasing any type of medical equipment, certainly ventilators, in a
time when they're just trying to make payroll.
At the start of the outbreak, the hospital had only five ventilators.
A request was made to the national stockpile, but none came.
A nearby hospital donated a machine and they found an older
ventilator in the back of a closet.
We've since found an old adult vent in a closet, been in the closet
for ten or twelve years because it was out of service.
We sent it off and got it refurbished and so that gave us seven
vents. According to Hoover, if additional Covid-19 patients require
ventilation, the hospital could convert some anesthesia machines to
low grade ventilators or transfer patients to a nearby hospital.
I think the great concern, obviously, is you have a rural hospital
that has exceeded its max capacity, has utilized its ventilator and
is unable to find a larger facility that it can transfer to at this
time. As a backup plan in case other facilities were overwhelmed, the
hospital adopted a scarce resource policy for allocating the
ventilators to patients who would benefit the most.
We started looking around to see what other people were doing and we
found several examples out there of scarce resources policies.
That scored your patients according to conditions that they had.
It wasn't age related or disability related.
If you had a cardiac problem, you've got this problem.
If you were a cancer patient and under treatment, you got to score.
And so it's a very objective scoring system.
But despite the dire financial outlook, Hoover said the hospital has
seen a drop in the number of patients since April 17th, 2020, and he
is hopeful the worst is behind them.