CEO Report – Protecting the Financial Health of Hospitals

MHA Rounds Report - Brian Peters, MHA CEO

"Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery."Charles Dickens

MHA CEO Brian PetersThe past year has been extremely challenging for everyone across the globe. At the very top of that list: those who have lost loved ones to the pandemic, and those who have suffered from the often severe health consequences associated with COVID-19. At the same time, the financial blow to hotels, restaurants, bars, entertainment venues, and countless other businesses large and small has been well documented. And we all know about the mental health concerns brought about by income and job loss, the need for remote learning for students and the resulting lack of socialization, plus a host of other consequences that have accompanied this pandemic and negatively impacted people for many, many months now.

As a Michigander and a father, I care deeply about all of this. And as the CEO of the Michigan Health & Hospital Association, I have the great privilege of getting to do something about it every single day. After all, our very mission is to “advance the health of individuals and communities.” It is from this perspective that I can tell you how proud I am of our member hospitals and health systems throughout the state — and how concerned I am for the wellbeing of our caregivers and staff, and for the financial viability of the organizations themselves as the dark cloud of the pandemic continues to hover over all of us. Am I biased? Perhaps. But I truly believe that hospitals must be supported and protected at this time more than ever, for the betterment of our entire society.

Our members have now been serving on the front lines for over a year and have experienced significant physical and mental trauma. For those institutions that serve our local communities and employ our healthcare heroes, the last year has also been filled with financial uncertainty at best, and devastation at worst. Early in the pandemic, when elective procedures came to an abrupt halt, the double-edged sword of new, unbudgeted expenses related to ramping up to deal with COVID-19 combined with lost volume and revenue on an order of magnitude that we have never seen in modern times, pummeled our hospitals and health systems financially. For even our largest members, furloughs and layoffs became necessary.  And for our smaller, independent or rural hospitals, there were legitimate concerns about keeping the doors open in the face of severe cash flow disruptions.

Just one example of new costs: personal protective equipment (PPE) is a term Americans became all too familiar with last year. Our hospital supply chain leaders can verify that increasing the number of gloves, gowns, respirators, masks and face shields, both for immediate use and for the “new normal” stockpile requirements, is not only more expensive due to sheer quantity, but the prices have soared due to increased demand. To avoid dependence on the global supply chain, many organizations are now diversifying their network of suppliers and contracting with domestic companies. However, doing so comes at a cost, as domestic production is typically more expensive. This is just one of many factors that have driven hospital total expense per adjusted discharge higher by 19.6% over the past year, according to a recent analysis of national data from Kaufman Hall. Our own data and anecdotal evidence show that Michigan closely mirrors this trend.

Coupled with increased expenses is decreased revenue, as total patient volume has yet to recover to pre-pandemic levels. The same analysis from Kaufman Hall found that overall revenue (not including federal aid from the Provider Relief Fund) fell 4.6%, with emergency department visits decreasing 26.8%. As part of surge planning, hospitals have been forced to delay many nonemergency medical procedures.  Unfortunately, images of hospitals admitting COVID-19 patients and constructing temporary outdoor facilities also created a misplaced fear among a subset of the public that hospitals were no longer safe places of care. Much work, at both the state and federal level, has gone into correcting this misconception, but there remains a significant number of people who have legitimate healthcare needs who are still delaying care — to their own detriment. The resulting drop in patient volume and procedures has created a gap in hospital revenue that will take a long time to recover.

Lastly, the insurance coverage mix is also continuing to change for the patients utilizing our hospitals, specifically moving toward government programs or no coverage at all. According to the National Center for Coverage Innovation, Michigan had the sixth highest increase in newly uninsured adults, with 222,000 individuals becoming uninsured due to job losses, representing a 46% increase from 2018 levels. We’ve seen the growth borne out in the Healthy Michigan Plan (HMP), our state’s Medicaid expansion program, which has seen enrollment increase from a pre-pandemic level of approximately 650,000 beneficiaries to nearly 900,000 today. While continued coverage for all Michiganders is a top MHA priority, and we are incredibly thankful for the existence of the HMP, this transition from employer-sponsored health plans to government healthcare programs means more patient care is being reimbursed at a lower rate in contrast to the full cost of care.

To directly address all these challenges, the MHA has advocated strenuously for financial relief at the state and federal levels, and our members have been incredibly grateful for it. Federal funds such as the CARES Act helped to alleviate the immediate crisis, while providing a measure of financial stability to all hospitals (and serving as a real lifesaver for some). We have successfully delivered accelerated payments, targeted loans and grants, and more. One item of important relief that was implemented at the beginning of the pandemic was a moratorium on Medicare sequestration, the scheduled 2% cut to all Medicare payments that would have been a significant financial hit to hospitals and health systems at the worst possible time. Recently, legislation that delays these cuts through the end of the year passed the Senate with a bipartisan vote (thank you to our U.S. Sens. Debbie Stabenow and Gary Peters, for their support) and is expected to pass the House of Representatives once Congress returns from Easter recess. All of this is helpful — but none of this is a long-term solution to guarantee the financial viability of hospitals. Our members (even pre-pandemic) are doing their part to be innovative and increasingly focused on cost-effectiveness. But they need our continued support.

There is cause for optimism as we head down the road to recovery. Today, all adults 16 years and older are eligible to receive the COVID-19 vaccine in Michigan. Vaccine supply, which has increased dramatically in recent weeks, is expected to expand in the weeks ahead. In fact, we are very close to the day where the supply and demand curve flips and our efforts will need to focus on reaching vaccine-hesitant populations. The reasons to receive the safe and effective vaccines are many, as most importantly they prevent hospitalization and death and protect loved ones and those around you from contracting the disease. There is no better evidence than recent data the MHA released that shows hospitalizations are increasing the slowest among the age cohorts that have a higher percentage of vaccination.

Collectively, achieving our state’s goal of vaccinating 70% of the population allows our financial recovery to truly begin. To return to some sense of normal, everyone must do their part to mitigate the chance of future outbreaks. That tool is in our toolbox and it starts by scheduling a vaccine appointment. From there, restrictions and protocols placed on in-person office work, education instruction, and entertainment and leisure activities can be lifted. But we cannot trick ourselves into thinking that we can do all these things without reaching our vaccine goals first.

As Michigan hospitals deal with a legitimate third surge of COVID-19 patients, it takes everyone to do their part to put our state and communities on a path to recovery. By doing the right things, practicing preventive measures such as wearing a mask, social distancing, washing your hands and receiving a vaccine, we can protect both our physical health and the financial health of our hospitals that operate 24/7/365 to provide care when we need it. After all, the same hospitals that are needed to fight COVID-19 today are the hospitals that will be needed to treat auto accident victims, cancer patients and countless other loved ones in the future. They deserve our full support.

As always, I welcome your thoughts.

MHA CEO Report – Making Progress Against COVID-19

MHA Rounds Report - Brian Peters, MHA CEO

“A pint of sweat saves a gallon of blood.” — General George S. Patton

MHA CEO Brian PetersLiving in a society with a 24/7 news cycle can be draining. It is no secret the seriousness and unprecedented nature of the pandemic we find ourselves in: a quick review of the latest metrics show 426 new cases were identified yesterday in Michigan, bringing our total to 82,782. Over 6,000 Michiganders have now died from COVID-19. However, amid daily case reports and COVID-19 outbreaks, significant progress has been made over the past few months that enables Michigan hospitals to continue to improve the health and wellness of our communities. Our hospitals are facing monumental challenges, but through continued dedication and hard work, the MHA and our members are collaborating across industries and business sectors to achieve our common goals.

There is no greater resource in this pandemic than our healthcare workforce, and ensuring they have the appropriate supply of personal protective equipment (PPE) is vital. While Michigan hospitals have purchased at least $93 million worth of PPE, the state has purchased an additional $250 million worth. A number of Michigan businesses have changed their production capacity to produce PPE, and the MHA has worked to coordinate donations directly to Michigan hospitals to every extent possible. Thankfully hospitals’ PPE “burn rates” and inventory on hand are much improved since April, and we stand at the ready in case of another COVID-19 patient surge.

To protect our workforce, the MHA also actively pushed for and ultimately secured liability protections through Executive Order 2020-61 and have advocated for the passage of Senate Bill 899. These protections are important to ensure providers serving on the front lines are not penalized for providing care during the unprecedented surge of COVID-19 patients when treatment was constantly evolving. In addition, the MHA has achieved regulatory relief through waived cost-sharing for COVID-19 testing and treatment, increased telemedicine opportunities and expansion of beds during surge through our state’s certificate of need (CON) process.

The MHA has been active in several other areas. For months, the MHA has worked with our hospitals to voluntarily publish hospital COVID-19 patient census and PPE days on hand and to share this data with interested parties. Not only does this data provide a transparent picture of how hospitals are faring amid the pandemic, but it also gives the state of Michigan valuable data for decision-making.

In addition, testing is vital in containing the spread of COVID-19. Hospital labs are an important piece in that effort, averaging 7,000 tests per day as Michigan’s overall testing capacity continues to increase. However, testing supplies such as reagents, swabs and transport media remain limited. The MHA has been coordinating with both state and federal partners to identify specific needs and advocate for more supplies in Michigan.

All of these efforts have come at a steep price. Last week the MHA released financial estimates on the impact of COVID-19 on Michigan hospitals. The 2020 COVID-19 Impact Report, Michigan’s Front Line of Defense, shows combined financial losses related to COVID-19 of nearly $3.2 billion. These estimates are based on voluntary data submitted by our members and likely represent the low end of financial losses. Even with CARES funding, our hospitals are facing a deficit of nearly $1.1 billion, which is growing every day.

These estimates also do not factor in expected losses due to the historic unemployment rates, as more patients move to Medicaid or become uninsured. During normal circumstances, the yearly total unpaid cost of care for Michigan hospitals is nearly $2.6 billion.

This financial impact is one of the largest hurdles our hospitals are trying to overcome. To address the revenue-related losses and increased expenditures, the MHA has helped to secure $2.1 billion in federal support through CARES funding, while adding an additional $25 million in state appropriations for hospitals. The MHA also actively worked with state lawmakers to ensure that the association’s priorities in the fiscal year (FY) 2020 budget were held harmless from reductions, including the rural access pool and obstetrical stabilization fund, Medicaid rates and provider tax-funded pools. Yet more support is needed, and we are closely monitoring negotiations at the federal level for additional support, particularly for Medicare loan forgiveness and liability protections, and at the state level as negotiations on the FY 2021 budget ramp up in advance of the Oct. 1 start of the new fiscal year.

Lastly, providing accurate information to the public and conveying a consistent message for our hospitals led to over 200 interviews with local, state and national media outlets being conducted. We’ve also highlighted on social media more than 250 healthcare professionals – nurses, physicians, environmental service workers and others – from communities across the state and thanked them for their dedication to fighting COVID-19 and caring for patients. More than 431,000 people shared, liked and/or commented on the posts.

In efforts to support public health, the Partnership for Michigan’s Health, which is comprised of the MHA, the Michigan Osteopathic Association and the Michigan State Medical Society, also issued a joint release urging residents to remain vigilant about distancing and wearing masks to prevent a second large surge of COVID-19 in the state. In addition, the partnership also published a joint op-ed in The Detroit News on the importance of vaccinations. Fighting the spread of misinformation to promote appropriate safety precautions can help limit the number of patients who become infected and ultimately require treatment.

Overall, even with an FDA-approved COVID-19 vaccine, we know it will take time and effort to eradicate this disease. Our hospitals have discharged more than 16,000 COVID-19 patients, and we know that number will only continue to grow over the coming months. However, that figure also represents parents, grandparents, friends and colleagues who have been stricken by COVID-19 and recovered. The actions we’re taking are helping our front-line caregivers make a difference and save lives. These efforts that I just reviewed are vital in ensuring the viability of our healthcare organizations and the health of the patients we serve.

The bottom line is that our collective hard work and determined efforts related to COVID-19 are unquestionably saving lives. Despite the exhaustion this entails, we must commit to continuing this critical work.

As always, I welcome your thoughts.

P.S. Don’t forget to participate in tomorrow’s state primary election, as the 2020 presidential election is critical to Michigan’s healthcare future. Please visit our MHA elections webpage for more information and resources.

Combating the Novel Coronavirus (COVID-19): Week of July 20

MHA Covid-19 update

coronavirus updateAs the threat posed by COVID-19 rises across the country, the MHA continues to keep members apprised of developments affecting Michigan hospitals during the pandemic through email updates and the MHA Coronavirus webpage. Important updates are outlined below.

Tools Available to Advocate for Next COVID-19 Relief Package

The MHA participated in a Virtual Advocacy Day that the American Hospital Association (AHA) hosted July 20, featuring presentations from AHA President and CEO Rick Pollack and AHA Executive Vice President Tom Nickels. An update was shared on efforts to include provisions to support hospitals in the next COVID-19 relief package, which includes additional dollars for the emergency relief fund, forgiveness for accelerated payments, and liability protections for front-line medical providers and facilities.

Since Senate negotiations on the bill reportedly stalled July 23, it remains important for healthcare providers to advocate for these provisions. The AHA has issued an Advocacy Alert (password required) asking that members contact their senators to stress their importance. While Michigan’s U.S. Sens. Debbie Stabenow and Gary Peters are healthcare champions, there is value in them hearing from their constituents on the importance of this funding. To aid in these efforts, the AHA has developed resources and a digital toolkit to help members engage with lawmakers virtually. Members with questions on federal advocacy topics may contact Laura Appel at the MHA.

HHS Extends Public Health Emergency

On July 23, the U.S. Department of Health and Human Services (HHS) extended the COVID-19 public health emergency for another 90 days. The renewal, officially signed by HHS Secretary Alex Azar, ensures that waivers received from the HHS and the Centers for Medicare & Medicaid Services will continue. Policies extended include the 20% Medicare inpatient add-on payment for COVID-19 patients, relaxed telehealth restrictions and other Section 1135 waivers. Members with questions should contact Laura Appel at the MHA.

HHS Announces Targeted CARES Act Funding, Clarifies Required Reporting

The HHS recently announced $10 billion in additional “targeted” hospital funding from federal Coronavirus Aid, Relief, and Economic Security (CARES) Act provider relief funds to assist hospitals with COVID-19 response efforts. The HHS asked hospitals to submit data on their COVID-19-positive inpatient admissions for the period Jan. 1 through June 10, 2020. Payments will be issued to hospitals with more than 161 COVID-19 admissions during this period, with a portion of Michigan hospitals set to receive additional funding from the allocation.

The HHS also shared details on reporting requirements for recipients of CARES Act provider relief funds. Recipients that received one or more payments exceeding $10,000 in the aggregate from the Provider Relief Fund, including the newly announced payments, are required to submit reports to the HHS on how the funds have been expended, using a portal that the HHS will open Oct. 1. Detailed instructions regarding these reports will be released by Aug. 17, and the Health Resources and Services Administration will host educational sessions for providers.

The MHA will continue to monitor hospital distributions from the CARES Act Provider Relief Fund and update members as information becomes available. Members with questions about this funding are encouraged to contact Jason Jorkasky at the MHA.

Guidance Released on Wage Increase for Direct Care Worker Grants

The Michigan Department of Health and Human Services released further information and guidance regarding the $2 per hour wage increase for direct care workers via state grants that was signed into law through Senate Bill (SB) 690 July 1. The department’s frequently asked questions document contains information regarding eligibility of individuals and facilities, as well as the logistics for providing the increased funding at skilled nursing facilities.

In SB 690, the Legislature appropriated $120 million to increase the wages of direct care workers. The language of the bill provided that the increases are above the rates paid March 1 and apply to the period from July 1 through Sept. 30, 2020. Only “direct care workers” at skilled nursing facilities are eligible for the grants. These workers include registered nurse, licensed practical nurse, competency-evaluated nursing assistant or respiratory therapist. The MHA will continue to share additional information about the grants as it becomes available. Members with questions on this issue may contact Adam Carlson at the MHA.

State FY 2020 Budget Protects Healthcare Priorities

During the week of July 20, negotiations ended on the state fiscal year (FY) 2020 budget as the Legislature approved a plan addressing a deficit of nearly $2.2 billion caused by economic losses surrounding the COVID-19 pandemic (see related article). The MHA actively worked with lawmakers to ensure that the association’s budget priorities were held harmless from reductions, including the rural access pool and obstetrical stabilization fund, Medicaid rates and provider tax funded pools. In the coming months, the Legislature and administration will work on the state budget for FY 2021, which begins Oct. 1, and the MHA will continue to stress the importance of fully funding healthcare during those negotiations. Members with questions may contact Adam Carlson at the MHA.

State Senate Approves Liability Protection Bill

Legislation to limit legal liability for healthcare facilities during the COVID-19 pandemic passed the Senate July 23 after receiving approval from the full House late July 22. Senate Bill (SB) 899 would protect facilities from lawsuits related to pandemic response. Specifically, the legislation protects from lawsuits related to the provision of care to COVID-19 patients, rescheduling patient care because of governmental orders or shortages of supplies.

Sen. Michael MacDonald (R-Macomb Township) introduced SB 899, and it passed the Senate May 7. The final version of the legislation as approved July 23 reflects the House substitute that was adopted in committee July 22. The legislation requires Gov. Gretchen Whitmer’s signature before becoming law. The MHA will continue to monitor and keep members informed on the issue. Members with questions should contact Adam Carlson at the MHA.

National COVID-19 Testing Implementation Forum and Testing Supply Registry Announced

The HHS announced July 21 a new program to capture feedback between federal officials and the private sector on COVID-19 testing. The National Testing Implementation Forum will bring together representatives from key stakeholder groups to share information and provide input to federal leaders about SARS-CoV-2 testing and diagnostics. A key aim of the forum is to share perspectives on how the HHS can best address end-to-end testing supply chain issues across commercial, public health, academic and other sectors and define optimal testing in various settings (diagnostic, screening, surveillance, others). The group will also aim to increase public health laboratory capacity, implement a national surveillance strategy, seek new techniques such as sample pooling and identify barriers to a streamlined national laboratory testing reporting system.

The same day, the Advanced Medical Technology Association (AdvaMed) announced the creation of a comprehensive, national COVID-19 diagnostic supply registry to help state and federal governments in their pandemic responses. As outlined in AdvaMed’s news release, the national registry is being launched in partnership with 13 commercial diagnostics manufacturers, nearly all of which produce supplies used in Michigan. The new registry will streamline communications and data sharing between diagnostic firms and the government, facilitate collaboration with public health stakeholders to optimize access to COVID-19 testing, and standardize reporting. Questions related to COVID-19 testing can be directed to Brittany Bogan at the MHA.

Grace Period Granted for Remote Pharmacy Supervision Step Down

The governor issued Executive Order (EO) 2020-152 July 14, removing some of the flexibility related to remote supervision of pharmacy technicians and staff that existed in EO 2020-124, which has since been rescinded. The Department of Licensing and Regulatory Affairs (LARA) has issued a memo discussing the topic and a timeline to fully transition from remote to on-site supervision. LARA will give pharmacies until 11:59 p.m. Sept. 30, 2020, before enforcing supervision and other requirements. Members with questions about EO 2020-124, EO 2020-152 or the memo from LARA may contact Paige Fults at the MHA.

Multilingual Mask-up Materials Available

The state of Michigan has available for download No Mask, No Entry posters in various languages, including English, Spanish, Arabic, Traditional Chinese, Simplified Chinese, Korean, Burmese, French, American Sign Language, Swahili and Bangla. Questions on available resources can be sent to the MHA Communications department.

U.S.-Canadian Border Remains Closed, Healthcare Employees Exempted

Acting Homeland Security Secretary Chad Wolf recently announced that the United States and Canada have extended the mutual ban on nonessential travel between the two countries until Aug. 20; that ban had been set to expire July 21. Essential travel, including that of healthcare workers, may continue uninterrupted. The MHA will continue to monitor and work with state and federal governments to keep the border open for essential healthcare employees. Members with questions on this issue may contact Adam Carlson at the MHA.

Additional information on the COVID-19 pandemic is available to members on the MHA Community Site and the MHA COVID-19 webpage. Questions on COVID-19 and infectious disease response strategies may be directed to the MDHHS Community Health Emergency Coordination Center (CHECC). Members with MHA-specific questions should contact the following MHA staff members:

Headline Roundup: COVID-19 Financial Challenges for Hospitals

Ruthanne Sudderth

Interlochen Public Radio and WWMT-TV published stories the week of June 15 that featured quotes from Ruthanne Sudderth, senior vice president, public affairs & communications, on the financial challenges hospitals are facing because of the COVID-19 pandemic.

Interlochen Public Radio published a story June 16 reviewing patient volume and staffing challenges that have occurred since hospitals responded to the COVID-19 pandemic. Hospitals delayed nonemergency procedures for several months and have been slowly seeing patient volume increase.

WWMT-TV, the CBS affiliate in Kalamazoo, aired a story June 18 on federal funding that hospitals in the area have received.

“The reality is that while there has been funding that’s come from the federal government and state, it’s really not filling that bucket and so we’re still experiencing losses,” said Sudderth to WWMT-TV.

Members with questions on COVID-19 efforts and resources should contact Ruthanne Sudderth, and any questions regarding media requests should be directed to John Karasinski at the MHA.