Prepare dinner County’s public well being system faces a monetary reckoning as COVID-19 drives up prices and drains income.
Two-hospital Prepare dinner County Well being was beneath strain earlier than the pandemic to chop spending and deal with a rising burden of uncompensated care and not using a everlasting chief. Now $30 million behind finances, the system is grappling with elevated prices like worker additional time and shrinking revenues as a consequence of fewer nonemergency surgical procedures and routine appointments.
A plan is underway to convey down the projected $61 million deficit for fiscal 12 months 2020, with officers late final month eliminating 70 positions via a mixture of layoffs and reducing vacant jobs. If prices and affected person volumes do not enhance, and federal funds cease flowing, the system might find yourself with a $187 million deficit subsequent fiscal 12 months.
“We’re mainly projecting what we imagine to be the worst-case situation,” interim CEO Debra Carey says. “We’re undoubtedly seeing the lack of sure revenues coming in, and the county has its personal challenges due to COVID, so it isn’t in a position to step in.”
At stake is the way forward for the county’s well being care security web, which gives way more free care to low-income sufferers than some other hospital within the space. Additional cuts might imply dropping deliberate capital initiatives, consolidating service strains or closing some neighborhood well being facilities. Along with the affect on affected person care, any erosion of providers would drive Prepare dinner County Well being sufferers to personal hospitals that—to various levels—are also coping with the monetary fallout from the coronavirus.
As one of many largest public well being networks within the nation—with a $2.eight billion annual finances—the system covers Stroger Hospital on the Close to West Aspect, Provident Hospital on the South Aspect, a community of clinics, an insurance coverage firm and medical providers for detainees on the Prepare dinner County Division of Corrections, in addition to the county’s Division of Public Well being.
“The power of a public well being system to regulate to a lowered income stream rapidly may be very troublesome,” says Duane Fitch, a Plante Moran associate who makes a speciality of well being care. “Well being care techniques have numerous mounted prices.”
Coronavirus precautions pressured Prepare dinner County Well being to scale back a variety of nonemergency providers in March, and revenue-generating actions proceed to be 40 % decrease than regular, officers mentioned final month. On the identical time, the system expects to spend as much as $32 million on worker additional time, private protecting tools and different prices associated to treating COVID-19 sufferers.
Whereas some public techniques rely extra closely on gross sales taxes and different native authorities funding, Prepare dinner County Heath primarily runs on funds for offering medical care. Since 2013, its tax allocation from the county has decreased by greater than $130 million. The county is offering $83 million in fiscal 2020 for public well being and correctional well being operations, however does not give the well being system cash for conventional medical providers.
Because of a complete of $122 million in federal CARES Act supplier reduction funding, the well being system hasn’t but wanted to hunt extra funds from the county, Carey says. County authorities has its personal challenges. Its basic fund faces a projected shortfall of $219.7 million in fiscal 2020, with gross sales taxes and different revenues down, officers mentioned final month. It plans to deal with the hole “via a mix of expenditure management measures, federal reimbursements and our personal reserves,” Prepare dinner County Chief Monetary Officer Ammar Rizki says in an e mail, noting that officers do not anticipate seeking to taxpayers to fill gaps within the basic fund or the well being fund.
However all bets are off in relation to a spot of as much as $409 million, together with the projected well being fund shortfall, for fiscal 2021. “Every thing is on the desk,” Prepare dinner County Board President Toni Preckwinkle mentioned final month.
“Every thing falls on the taxpayers finally,” says Laurence Msall, president of the Civic Federation of Chicago, a fiscal watchdog. “What will not be identified is the extent of help from the federal authorities. Will it’s ample to spare traumatic will increase in Illinois and Prepare dinner County taxpayers’ obligations?”
Even earlier than COVID-19 began spreading within the U.S., the well being system was beneath intense monetary strain from the rising value of uncompensated care, which incorporates unpaid payments and free care. From fiscal 2015 to 2019, Prepare dinner County Well being noticed annual charity care alone enhance 23 % to $327 million.
In 2018, Stroger Hospital spent $324.6 million, or 54 % of its income, on charity care. In contrast, Northwestern Memorial Hospital in Streeterville spent $23.2 million, or 1 % of its income.
Based mostly on decrease affected person volumes, Prepare dinner County Well being predicts charity care might drop to roughly $269 million for fiscal 2020. The dip additionally is perhaps the results of different hospitals stepping as much as take care of uninsured COVID sufferers, given the potential for reimbursement from the federal authorities in the course of the pandemic.
In the meantime, within the midst of the gravest public well being disaster in generations, Prepare dinner County Well being is looking for a everlasting CEO. Carey, who beforehand served as deputy CEO of operations, took the helm on an interim foundation in January after John Jay Shannon’s contract was not renewed by the well being system’s impartial board. Carey says the seek for a everlasting chief is underway, however she declines to remark additional.
The system additionally might get a lift from its Medicaid managed care plan, which expects enrollment to extend as extra individuals lose their jobs and qualify for government-funded medical insurance. CountyCare, which operates solely in Prepare dinner County, has 326,000 members and accounts for 15 % of the Medicaid managed care market in Illinois. Like different insurers, CountyCare has needed to pay fewer claims amid COVID-19 as hospitals tabled nonemergency procedures and plenty of outpatient visits. However the well being plan is not gearing up for a windfall.
“We all know that, finally, people will nonetheless have to get care,” Carey says. “It is actually only a delay. It is not a financial savings in any approach.”
Nevertheless, with fewer new claims coming in, the pandemic provides CountyCare a possibility to compensate for its backlog, which prompted an inquiry from the federal Facilities for Medicare & Medicaid Providers earlier this 12 months. As of June 7, the well being plan had about $175 million in unpaid claims, down from about $350 million on Feb. 9. Carey says CountyCare submitted a corrective motion plan to CMS in April and has taken the suitable steps to deal with the company’s considerations.
Within the meantime, revenues are slowly recovering as nonemergency procedures resume. However many unknowns stay, together with whether or not a second wave of COVID-19 might hit, forcing hospitals to purchase up much more private protecting tools and droop nonemergency care as soon as once more. Along with the steps Prepare dinner County Well being is taking to deal with the potential deficit, Carey says different hospitals within the space additionally will play a essential function within the system’s future.
“It is so necessary that now we have others assist when it comes to charity care and the uninsured,” Carey says. “If we begin reducing again providers as a result of we simply should not have the assets,” she warns, “it can affect each different well being system on this county.”