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Hospitals Burdened by the Financial Impact of Putting Elective Surgeries on Hold

Written by KR Wolfe | May 14, 2020

After putting elective surgeries and non-essential care on hold for nearly two months due to the Coronavirus pandemic, hospitals nationwide are now beginning to look at re-opening operating rooms and other medical services. The crisis has taken a huge financial toll on the healthcare community.

For several weeks, hospitals were not only losing money from canceled elective surgeries, but also from reductions in other revenue streams, including ER, imaging, lab testing and more.

The Hospital and Healthsystem Association of Pennsylvania (HAP) estimated that the group’s members were taking a 40% revenue hit each month, an estimated $1.5 billion to $2 billion collectively due to elective procedures postponed or canceled due to Covid-19. (Source: Pittsburg Post-Gazette).

Making matters worse, thousands of hospitals across the nation were operating on shaky financial ground before the Covid-19 tsunami arrived.

An Extended Pandemic Could Sink Hundreds of Hospitals

Lost hospital revenues during this global health crisis are going to have long-lasting, crippling effects and may result in the bankruptcy or closure of hundreds of facilities. The very survival of smaller hospitals, especially in rural areas may ultimately be determined by how long the pandemic continues.

The Minnesota Hospital Association estimated that its member hospitals were losing as much as $31 million per day from canceled or postponed elective surgeries. Losses such as these are not surprising when OR time is worth up to $62 per minute, (source: the Journal of Cosmetic Surgery).

To help relieve some of the economic damage caused by COVID-19, President Trump has signed four emergency funding bills into law, the most recent of which provided $75 billion for hospitals. An earlier aid package created a $100 billion emergency fund to reimburse healthcare providers for expenses and lost revenue linked to the pandemic. These relief funds include $10 billion specifically for rural hospitals, clinics and healthcare centers.

Together with billions of dollars in relief funding from the federal government’s CARES Act, getting operating rooms back up to speed and generating revenue is going help the nation’s healthcare systems to begin recovering from the Covid-19 firestorm. Read more about the CARES Act and the funding it provides for hospitals and other healthcare organizations here.

Re-Opening Is Going to Take Time

Even for the larger hospital groups that had the assets to weather the storm and make payroll, this re-opening process is sure to be a lengthy and confusing ordeal. According to Seema Verma, an administrator for the Centers for Medicare and Medicaid Services, restarting elective procedures will be determined on a state and local basis, and each hospital must first meet certain criteria. The state or region must have a downward curve of documented and potential coronavirus cases for two weeks, as well as having robust testing capabilities in place.

Renovate Operating Rooms or Preserve Cash?

In an effort to conserve cash, a number of hospitals have postponed or canceled OR renovations and capital equipment installations that had been budgeted for 2020. It’s a catch 22, because while cash is scarce, newly renovated ORs could improve efficiency in caring for the expected onslaught of elective surgical procedures.

“The decision to renovate will be largely determined by each hospital’s budget, and whether funds allocated for facility improvement this year will roll over into next year if not used,” said Rachel Wolfe, president of KR Wolfe, Inc. “We want our customers to know, however, that if they decide to move ahead with renovations and new capital equipment installations, most OR renovation projects can be completed in 7-14 days if the equipment is on deck.” This means hospitals and facilities do not need to tradeoff lengthy OR downtime for improved patient care.

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About KR Wolfe, Inc.

Incorporated in 2007, KR Wolfe, Inc. is a technology-forward construction services company specializing in technical, end-to-end Operating Room construction projects, Systems Integration, Capital Equipment Installation and Field Maintenance Services. Our experienced engineers and technicians deliver turnkey solutions for the medical, transportation and government sectors.

KR Wolfe —Making the equipment and technology of tomorrow work today.