The gist: Hospitals within Lafayette’s two major health systems got federal relief from the CARES Act that will only cushion the blow from COVID-19 losses, mainly attributable to postponed elective procedures.
For April and May, Lafayette General Health took in $40.4 million in relief from the CARES Act’s Provider Relief Fund. Of that, $24.1 million went to its flagship hospital, Lafayette General Medical Center, which treated the largest number of COVID-19 patients in its system. Two of the Baton Rouge-based Lourdes system’s local hospitals, Our Lady of Lourdes and Heart Hospital, got $6 million and $1.3 million, respectively, in April but didn’t receive any funding in May.
Relief won’t cover losses. While welcome, the federal infusion won’t cover losses each system sustained when elective procedures were halted in mid-March to preserve vital personal protective equipment and other resources, like staffing, bed capacity and ventilators. While the vise was loosened in late April, and most procedures are now being performed or have hit facilities’ and area doctors’ schedules, there is a lot of catching up to do. And a new problem has emerged: People with life-threatening conditions are afraid to visit emergency rooms for fear of contracting coronavirus. “There’s a lot of false perceptions about the safety of coming to the hospital,” Dr. Henry Kaufman, Lourdes’ interim chief medical officer, told The Current last month. “The hospital remains a very, very safe place to be, especially if you’re having a major medical issue. For a lot of people, concern over the coronavirus is higher than their concern over their stroke or their heart attack or their major health event, and I don’t think that’s the right way to think about that right now,” he said. “It should be just the opposite.”
LGH says its system sustained a 35 percent loss, totaling approximately $70 million, from March to May. LGH spokeswoman Patricia Parks Thompson says in addition to the cessation of elective and non-essential procedures, the losses can be attributed to the treatment of COVID-19 patients and the preparation for that treatment, like the construction of more negative air pressure rooms, expanding surge capacity at facilities and the purchase of large quantities of PPE. The full financial impact is not yet known, she says.
Lourdes’ parent company, the Franciscan Missionaries of Our Lady Health System, estimates revenue losses of $160 million from March to May, according to Dr. Richard Vath, the system’s CEO. “Despite these unprecedented decreases in revenue, the health system remains in a stable financial position,” Vath says, noting the steps the system has taken to cut expenses, including reduced hours for certain employees to match reduced volumes, executive salary reductions and postponing some expenditures.
LGH has instituted similar cost-cutting measures. “Through the COVID-19 crisis, we have not had to furlough any staff. However, we did have to reduce some employees’ hours, like when surgeries were put on hold, but we were mostly able to reassign/redeploy staff to other areas,” says Thompson. The system also put a freeze on the hiring of non-clinical positions, asked all staff and physicians to take paid time off and eliminated travel for the remainder of the fiscal year.
There are strings attached to some of the funding. “Distributions from the Provider Relief Fund are not loans and do not need to be repaid so long as LGH complies with certain terms and conditions imposed by CMS, including reporting and compliance requirements,” says LGH’s Thompson. For example, according to Healthcare Dive, providers who got funds in the first round of funding must be currently diagnosing, testing or treating COVID-19 patients, and the funds must be used for coronavirus response; they specifically cannot be used for lobbying or certain levels of executive pay.
According to The Advocate, which calculated that Louisiana’s hospitals received $1.2 billion of the $72 billion in provider relief payouts distributed so far, the funds arrived in two batches based on different formulas to determine the amounts each provider receives, an allocation process some told the paper is arbitrary. A portion of the first round, about $475 million for Louisiana, was distributed last month to thousands of the state’s facilities, the paper reported, including hospitals, doctors’ offices and other providers, based on a formula related to the number of Medicare patients they’ve treated in the past.
The latest tranche of $400 million for the state, the high-impact distributions, went to 16 hospitals that treated more than 100 COVID-19 patients as of April 10, according to The Advocate, which analyzed the payouts and published a chart showing what each Louisiana hospital received over the past two months.