This spring, Northwest hospitals and health systems reported some of their largest financial losses since the COVID-19 pandemic began. In some cases, the need to repay loans provided by the federal government early in the pandemic contributed to their financial problems.
Providence Health Services, based in Renton, Washington, lost $ 510 million in the first quarter of 2022. Oregon Health & Science University, based in Portland, lost $ 64 million in the current fiscal year, including the $ 20 million loss in the month of February alone.
And the St. Louis Health System. Charles, of Bend, lost $ 21.8 million and announced layoffs.
All three health systems cite the impact of the omicron wave, inflation and the labor crisis on health care as factors in the loss of money in their operations.
Most hospitals take pandemic aid dollars, from the CARES Act and other sources, to recoup part of the losses.
But a little-known assistance program, the Medicare Accelerated and Advance Payments program, offers short-term interest-free loans, not grants. And now, the fees come because of a time when hospital costs are rising rapidly and revenue from patient stays and surgeries is even slower.
When the pandemic began two years ago, Oregon hospitals and primary care providers received more than $ 1.1 billion in advance payments from Medicare, according to records shared. at the Oregon Association of Hospitals and Health Systems. The idea is to keep the money flowing in the early months of the pandemic crisis, if elective surgeries are canceled, by paying hospitals in advance for the services they will provide to Medicare patients in the future.
The program was previously used to support hospitals affected by fires and storms. The idea is that hospitals will be able to pay back the advances once the crisis has passed and operations have returned to normal. But the pandemic continues – and hospitals and health systems are still facing the effects. At the same time, the federal government wants to return its money to continue funding Medicare.
Based on the number of Medicare patients they treat, PeaceHealth (headquartered in Vancouver, Washington), OHSU and St. Louis. Charles Health System got the largest growth of Oregon’s lending systems: $ 214 million, $ 137 million, and $ 94 million respectively. .
Congress set the payment timeline and extended it once. Hospitals lobbied, unsuccessfully, to forgive debts.
The federal attempt to recover the loans
In March, a year after missing the first payment, the U.S. Department of Health and Human Services, which administers Medicare, began recovering cash advances by paying health systems 25% less for claiming Medicare payment. Earlier this year, in line with a schedule set by Congress, they began paying only 50% of the fee for any services provided by the hospital to a Medicare -covered patient.
Hospitals may also choose to pay Medicare for loans directly to avoid reducing their fees.
The Lake Health District, in remote Lake County, Oregon, received about $ 5.2 million in grants from the Provider Relief Fund, and a $ 7 million loan from Accelerated and Advance Payments, which it has now repaid.
CEO Charlie Tveit says the Lake Health District pays Medicare even if he considers deletions or cuts to services, including a long-term care facility and a small hospice program.
“We’re looking at that. We can’t continue to lose like we used to, ”he said.
Tveit said the high cost of hiring temporary employees through an agency, for critical positions not filled at Lake Health, is the main driver of losses. Most hospital systems are short on nurses and pay high salaries for certified nurses to travel to their hospital for short hours. But, as Lake Health and others have found, that can be expensive right away.
The Lake District did not spend the advanced payments it received from Medicare, because it was likely to have to pay off the debt. However, Tveit said it would be disappointing to return federal aid – especially if he could not predict how COVID -19 would impact his future operations.
“We don’t know what’s going to happen this fall,” Tveit said. “It could come back with revenge.”