Iowa hospitals have received more than $500 million in federal relief payments, but the Iowa Hospital Association says those amounts won’t come close to making up lost revenue caused by the COVID-19 pandemic, especially for small, rural-access care hospitals.
About $16.7 million has been sent from the federal government to the hospitals in Oskaloosa, Pella and Knoxville from funding allocated by the CARES Act.
On June 3, IHA announced the state’s 118 hospitals stand to collectively lose as much as $2.17 billion in revenue by the end of the year. Gov. Kim Reynolds’ suspension of non-emergency surgery, elective procedures and other routine clinical visits in March, all of April and into the first part of May has caused significant financial losses.
For Knoxville Hospitals and Clinics, these services represent more than 60% of the hospital’s total revenue.
“The services that we did maintain were emergency services, inpatient services and others that were deemed to be critical, but those never pay very well,” says KHC CEO Kevin Kincaid. “We were basically shut down financially.”
Prior to the pandemic, KHC, a nonprofit community hospital, was recognized as one of the Top 100 Hospitals in the country. According to Kincaid, part of the recognition was because of their strong financial position.
“We were looking at setting yet another record financially this fiscal year,” says Kincaid. “We were doing really well, and we were pretty happy with our performance. But then along came COVID.”
Pella Regional Health Center and Mahaska Health were also financially strong prior to the pandemic, according to each hospital’s CEO. All three hospitals operate at a 25-bed capacity.
“We had some great volume months prior to the pandemic,” said Mahaska Health CEO Kevin DeRonde. “We had new providers start here and added new service lines.”
Many hospitals also had to furlough employees to help curb financial losses caused by the suspension. Kincaid says KHC furloughed about 40% of the hospital’s staff. In a written statement to the Oskaloosa Herald, Kroese says Pella Regional also reduced staffing “to preserve resources for the future.”
On the other hand, DeRonde says Mahaska Health did not furlough or reduce their staff.
“We re-allocated a lot of our employees throughout the hospital when volumes were low, whether that was cleaning facilities or expanding our environmental services,” says DeRonde.
HHS Provider Relief Fund
According to the Department of Health and Human Service’s (HHS) Provider Relief Fund database, the bipartisan CARES Act and the Paycheck Protection Program and Health Care Enhancement Act have provided $175 billion in relief funds across the nation to hospitals and other healthcare providers on the front lines of the coronavirus response.
Payment from the $50 billion general distribution, the $12 billion targeted allocation to high impact areas and the $10 billion targeted allocation to rural providers, as well as the $4.9 billion targeted to skilled nursing facilities, have been distributed by HHS through the Health Resources and Services Administration.
Iowa hospitals received $190.3 million in CARES Act relief fund payments alone in April and are expecting as much as $360 million more in the second round of federal relief aid.
According to the database, Mahaska Health has received $5,459,924 in federal relief payments. DeRonde says the hospital also applied for a Federal Emergency Management Agency (FEMA) grant.
“It’s been very helpful, especially during this time,” says DeRonde. “There’s also SBA [Small Business Administration] loan opportunities as well, along with PPP [Paycheck Protection Program] payment. Those funds have been available to us as well, and they’ve been very helpful during this interesting time.”
KHC also received federal relief payments, totaling $4,552,248. According to Kincaid, the first round of general distribution payments sustained the hospital for about two to three weeks of losses. The hospital also received funds from the $10 billion targeted allocation to rural providers, estimated at $3.8 million, says Kincaid. This second disbursement will carry the hospital for about 90 days.
“We’re really grateful for the money that we did receive, and it does carry us through probably the next three months pretty well,” says Kincaid. “We’re still concerned about what the future holds, but we’re pretty well taken care of through the month of July.”
Pella Regional Health Center also received federal relief payments, totaling $6,760,162. However, Kroese said he doesn’t know if that will be enough to cover lost patient revenue.
“Pella Regional did receive funds through the CARES Act relief fund and we expect the money to provide help for us,” he said in a prepared statement the hospital provided to the Oskaloosa Herald. “But we don’t know yet if it will be enough to cover lost patient revenue.”
All three hospitals declined to comment when the Oskaloosa Herald asked to provide their total number of financial losses so far. Knoxville Hospital’s CFO Maggie Hamilton-Beyer provided a ballpark average, saying COVID-19 had cost the hospital about $1 million to $1.5 million in net revenues per month.
On April 24, Gov. Reynolds allowed hospitals to resume non-emergency surgery, elective procedures and other routine clinical visits. Nonetheless, the future remains uncertain for hospitals across the state as demand hasn’t yet returned to normal.
“Things have not returned to normal, and we don’t expect them to for some time,” says Kincaid.