An Expert Discussion on the Provider Relief Fund
August 3, 2020
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Health care providers are facing prolonged financial pressure as COVID-19 continues to spread across the U.S. Congress and the administration have pursued several actions to deliver aid to hospitals, health systems, and outpatient health care practices. The largest source of federal aid is the Provider Relief Fund. Through several COVID-19 relief packages, Congress has allocated $175 billion to this fund to support a range of health care entities treating patients with COVID-19 and attenuate revenue losses brought on by a drastic decline in the utilization of other health services. The Department of Health and Human Services has released the Provider Relief Fund in several waves, but some providers most in need have faced barriers to access these funds and many continue to grapple with immense revenue losses. During this webinar, panelists addressed the following key questions:
- How has the relief fund been distributed to date among different health care entities?
- How have hospitals and ambulatory care providers been financially impacted by the pandemic and what are the implications for access to health services?
- What factors should policymakers consider as they weigh additional options to support providers?
Panelists:
- Suzie Desai, MBA, Senior Director, Not-For-Profit Health Care, U.S. Public Finance Ratings, S&P Global
- Kenneth Kaufman, MBA, Managing Director and Chair, Kaufman Hall
- Mark Miller, Ph.D., Executive Vice President of Health Care, Arnold Ventures
- Karyn Schwartz, Senior Fellow, Kaiser Family Foundation (KFF)
- Billy Wynne, J.D., Chairman, Wynne Health Group
This event was made possible by Arnold Ventures.
Event Resources
Key Resources
“Limitations of the Program for Uninsured COVID-19 Patients Raise Concerns.” Schwartz, K., and Tolbert, J. Kaiser Family Foundation. July 17, 2020. Available at http://allh.us/kVWQ.
“The Effect of COVID-19 on Hospital Financial Health.” Kaufman Hall. July 2020. Available at http://allh.us/3Bvc.
“Options to Support Medicaid Providers in Response to COVID-19.” Musumeci, M., Rudowitz, R., Hinton, E., et. al. June 17, 2020. Available at http://allh.us/dJC6.
“A Bumpy Recovery Is Ahead for Hospitals and Other Health Providers as Non-Emergent Procedures Restart.” Peknay, D., and Desai, S. S&P Global Ratings. May 26, 2020. Available at http://allh.us/btVv.
“Distribution of CARES Act Funding Among Hospitals.” Schwartz, K and Damico, A. Kaiser Family Foundation. May 13, 2020. Available at http://allh.us/8Phf.
“COVID-19 Webinar Series Session 16 – The Changing Landscape of Primary Care.” Alliance for Health Policy (webinar). May 20, 2020. Available at http://allh.us/Dcnr.
“Update on COVID-19 Funding for Hospitals and Other Providers.” Schwartz, K., Tolbert, J., Pollitz, K., and Neuman, T. Kaiser Family Foundation. April 24, 2020. Available at http://allh.us/9pkX.
Additional Resources
“What We Know About Provider Consolidation.” Schwartz, K., Lopez, E., Rae, M., et. al. Kaiser Family Foundation. August 3, 2020. Available at http://allh.us/xP9B.
“COVID-19 Health Care Response and Resilience Program.” Duke-Margolis Center for Health Policy, Families USA, and United States of Care. July 30, 2020. Available at http://allh.us/c4vr.
“How Much Fiscal Relief Can States Expect from the Temporary Increase in the Medicaid FMAP?” Rudowitz, R., Corallo, B., and Garfield, R. Kaiser Family Foundation. July 22, 2020. Available at http://allh.us/9HvX.
“US Not-For-Profit Health Care Rating and Outlook Actions, June 2020 and Second-Quarter 2020.” S&P Global Ratings. July 27, 2020. Available at http://allh.us/RkAY.
“Chart: Key Federal COVID-19 Stimulus Funding Opportunities for Health Care Providers and Hospitals.” Wynne Health Group. July 17, 2020. Available here.
“The Impact of COVID-19 on Hospital Finances.” Holt, C. American Action Forum. July 17, 2020. Available at http://allh.us/htAH.
“CARES Act Provider Relief Fund Distribution: A Timeline.” Paavola, A. Becker’s Hospital Review. June 29, 2020. Available at http://allh.us/w9ka.
“Coronavirus Disease 2019 (COVID-19) Data Insights.” Phreesia. May 28, 2020. Available at http://allh.us/tugr.
“House Passes the Heroes Act.” Manatt, Phelps & Phillips, LLP. May 27, 2020. Available at http://allh.us/xwab.
“Pandemic Shock Threatens to Undermine Outpatient Care.” Schneider, E. and Shah, T. The Commonwealth Fund. To the Point (blog). May 20, 2020. Available at http://allh.us/4n6Y.
“The Impact of the COVID-19 Pandemic on Outpatient Visits: A Rebound Emerges.” Mehrotra, A., Chernew, M., Linetsky, D., et al. The Commonwealth Fund. May 19, 2020. Available at http://allh.us/7Gnr.
“U.S. And Canadian Not-For-Profit Acute Care Health Care Organizations.” Keller, C., Zetea, N., et. al. S&P Global Ratings. Updated May 15, 2020. Available here.
“Primary Care and COVID-19: Week 9 Survey.” Primary Care Collaborative and the Larry A. Green Center. May 8, 2020. Available at http://allh.us/AkQN.
“How Covid-19 Will Impact the Financial Outlook for the Health Care Industry.” Egan, Y. Advisory Board. May 8, 2020. Available at http://allh.us/TFJ9.
“Primary Care and the COVID-19 Pandemic.” Lewis, C., Seervai, S., Shah, T., et al. The Commonwealth Fund. To the Point (blog). April 22, 2020. Available at http://allh.us/ypqk.
“Targeted Options for Increasing Medicaid Payments to Providers During COVID-19 Crisis.” Boozang, P., Mann, C., Karl, A., et. al. Manatt, Phelps & Phillips, LLC. April 10, 2020. Available at http://allh.us/rD7m.
Transcript
(This is an unedited transcript. For accurate quotes and presentations, please refer to the full-event video.)
0:07
Good afternoon, everybody.
0:08
I am Sarah Dash, President and CEO of the Alliance for Health Policy.
0:13
For those who are not familiar with the Alliance, welcome, we’re a non partisan resource for the policy community dedicated to advancing knowledge and understanding of health policy issues.
0:24
Since March, the Alliance has hosted dozens of programs to provide insight into the covert 19 response. You can find additional resources and recording that both webinars on our website, all health policy dot org.
0:37
The Alliance for Health Policy, gratefully acknowledges, Arnold Ventures for supporting today’s webinar. You can join today’s conversation on Twitter, using the hashtag. I’ll have live and follow ethanol health policy.
0:48
We truly want you all to be active participants. So please get your questions ready, and here’s how you do it. You should see a dashboard on the right side of your web browser that has a speech bubble icon with a question mark. Use that icon to submit questions that you have for the panelists at any time. We will collect them and address as many as we can during the broadcast.
1:08
And, you can use that icon in case you’re having any technical issues.
1:12
Check out our website. I’ll have policy dot org for background materials and a recording of today’s webinar, which will be made available there soon.
1:22
Today, our panelists will discuss options mitigate the financial impact of covert 19 on healthcare providers.
1:31
Hospitals and outpatient care entities are facing prolonged financial pressure as … continues to spread across the US. Many have incurred increased cost to safely care for patients with 19, and at the same time, utilization of non related healthcare services falling, which has had a devastating impact on provider revenues.
1:51
Congress and the administration have taken several actions to deliver aid to hospitals, health systems, and outpatient health care practices.
1:58
But some providers most in need have faith barriers to these funds, and many continue to grapple with immense financial losses. Today, I’m delighted to be joined by a group of all our panelists to discuss these issues and raise consideration for policymakers as a way additional options to support providers.
2:16
First, I am pleased to introduce …, Chairman of the When Health Group, a national public interests, health policy consulting firm, providing strategic counsel and advocacy services to elite healthcare organizations. Ellie previously served as Health Policy Counsel to the Senate Finance Committee.
2:33
Next, we’ll hear from Karen Schwartz, who is a senior fellow at the Kaiser Family Foundation. Charon previously worked as a Vice President for Pharma, and served in the Office of the Assistant Secretary for Planning and Evaluation at Health and Human Services.
2:47
Next, we’re pleased to be joined by Ken Kaufman, who is the chair and founder of Kaufman Hall, where he helps hospitals and other healthcare organizations with critical strategic challenges.
2:58
Next, we’ll hear from Suzie Desai who is a senior director and sector leader for the not for-profit healthcare group at S&P Global. Entity is responsible for all aspects of the health care practice, including criteria, development, and analytical thought leadership. Finally, I’m pleased to be joined by Mark Miller. Mark is executive vice president of healthcare at Arnold Ventures. And prior to joining Arnold Mark was the Executive Director of the Medicare Payment Advisory Commission. Our panelists are going to open with a few minutes of remarks. And then we will open it up to questions from the audience. So, again, as a reminder, feel free to get those questions rolling. And we’ll take as many of them as we can. With that, I’m going to turn it over to Billie, when Billy.
3:39
Thank you so much, sir. Thanks to you and others, the Alliance for Health Policy for having us to that invited me to participate.
3:48
My goal here is to briefly provide some broader context for the funding streams flowing to providers to help them respond to the Kobe pandemic and talk a little bit about where I see things going from here with regard to congressional delegations and so forth. And I know that others are going to go into more detail on how the funding allocated and some of the issues related to that.
4:14
So, first of all, Sarah alluded to Congress and HHS, have taken several steps to support providers in addressing the pandemic that we’re currently experiencing.
4:26
In the Cares Act, the so-called Phase three Covert Response Bill, Congress appropriated $100 billion to the Provider Relief Fund.
4:35
The 3.5 bill that that included an extension of the Paycheck Protection Program, another items. They appropriated another 75 billion. So today we have $175 billion as the provider early on.
4:48
I do want to quickly distinguish the PRS from other funding streams that are, that providers are eligible for, including, for example, the Medicare Accelerated Payments Program, where providers can receive up to 3 to 6 months of anticipated Medicare payments events, like the Provider Relief Fund.
5:09
Currently, those payments are required to pay back their loans, although there are some advocating for forgiveness, so the spiritual forgiveness of those loans, and we’ll see where that leads, CMS has also taken some steps under the public emergency declaration to expand access to things like telehealth to create out on payments for covered related inpatient admissions, et cetera.
5:36
that that public health emergency, by the way, I’m sure you saw, was recently extended until late October. So those programs can continue at least that long here, too. So, the code for extending those programs, in particular, the expansion of access to telehealth services Even after the subsides lastly. I just want to quickly note the Paycheck.
6:01
Protection Program, PPB.
6:03
Several health care providers have received those dollars in particular, especially in the smaller, $150,000 below allocations.
6:13
A lot of physician or a dentist offices, childcare services, and others have received some of that money.
6:19
So, we’ve got lots of different streams to providers. I just wanted to quickly flag some of those other items. Just in part to make sure we don’t have confusion about, which is that, I would just say at a broad level. So far, there have been some, some criticisms, I guess is inevitable the program of this size and speed, of the, of the PRS.
6:40
CMS has, as I think, Karen and others, look at, into, there’s still about, I think, $60 billion or so, 175 billion.
6:48
That is not the disbursed, there has been some criticism of the course and criticism in various ways and methodologies in which HHS has chosen to release the funds.
6:57
It’s a pretty broad latitude to make those determinations justice responses that because of the uncertainty of additional congressional funding, they’ve wanted to take it a bit slower in terms of allocating the funding that they have. Congress does allocate new funding. I think you would see some of those preexisting dollars go down to the door much more quickly, but that’s kind of the high level debate going on in that regard.
7:26
Terms of what is next.
7:28
Just briefly what a comment that I’m sure everybody is watching closely.
7:32
The negotiations around the four point O Co good release measure. The House has a bill. Of course, Democrat Pals.
7:42
That would provide a total of about three point four trillion dollars in total relief, including $100 billion of new funding for the provider, will be funds.
7:52
The republican led Senate has put out a proposal that has $1000 billion of total covered relief and $25 billion allocated to the Provider Relief Funds.
8:03
So, clearly, a large, a large gap.
8:06
I think that generally, the comments are coming out of yesterday’s negotiations, did not give us a lot of optimism that we’ll see swift resolution of those differences, but.
8:18
Those deliver something, the terms of future covert related.
8:26
So, there are some other items, consideration in that package, and with this, so I’ll stop pass the baton, But, for example, the Democrat bill includes an increase in the …
8:39
funding, medicaid related funding to states separate, bucket the state and local aid funding, the Republican Senate bill, as liability protections for providers, on the other hand. And then both parties are also appear to be intent on continuing unemployment benefits, though, they’re far apart in terms of the size.
9:08
Details with which the funding?
9:12
Hopefully, that’s a helpful overview. Thanks again for having me a record of the questions.
9:18
Great. Thank you so much, Billy.
9:21
And now I’m pleased to turn it over to Karen Short to have some slides to show us as well.
9:27
Great. Thanks so much, Sarah.
9:29
So we can move ahead to the first slide and I’m going to be walking you all through 175 billion in Provider Relief Grants in a little bit more detail.
9:40
As Bill mentioned, Congress gave HHS very little guidance on how does $175 billion in grants should be distributed. Essentially just send the money should go to health care entities and could be used either for expenses related to cope in 19, or for loss of revenue due to the pandemic.
10:00
What HHS has chosen to do so far is allocate these grants into larger buckets and then smaller chunks within each of those buckets.
10:10
So, first, HHS made what they call general allocation first to Medicare providers, and then later they open this up to Medicaid providers and dentists, and each of these providers to receive grants that amounted to 2% of their net patient revenue.
10:31
And as I’ll discuss later, there’s winners and losers with this formula.
10:35
HHS has also made targeted distribution to specific types of providers, may have needed more assistance, namely hospitals that treated a lot of cope at 19 patients, safety net hospitals, rural providers, and others.
10:51
We can move to the next slide.
10:55
All right, there’s a lot of numbers on this pie chart.
10:57
I apologize, but I do want to draw your attention to a couple of things on this pie chart, which shows how the money has been distributed so far, so in total, a little less than $15 billion is going to Medicaid providers, and then another twelve point nine billion dollars going to safety net hospitals.
11:17
So this means in total, less than 30 billion is targeted directly towards the safety Net, and these Safety Net providers are operating option on the finished margins and may be those most in need of help right now.
11:32
And additionally, when these providers provide free care to the uninsured, that care is not factored into that 2% of net patient revenue formula.
11:43
Since, as we all know, 2% is still zero.
11:47
So, no, general provider relief grants were given out that accounted for charity care for the uninsured.
11:57
As Billy noted, another thing, ah, that’s interesting in this pie chart that you’ll see is there’s almost 60 billion that’s still left to be distributed, some of that money is being used to reimburse providers for treating uninsured patients. But considering that the Cures Act was signed into law on late March. That’s a lot of money left to be distributed.
12:19
Providers who accept this money do not have to meet.
12:23
Or do you have to meet certain terms and conditions? Notably?
12:26
They’re not supposed to balance Bill out of network patients with covert 19, but it’s not clear how many patients are aware of this protection and how well it’s being enforced to move to the next slide.
12:43
Banks.
12:44
So we did some analysis of the Medicare general distribution and what we found should really not be surprising allocating grants based on a provider’s general revenue tends to favor the providers who get paid more.
12:58
So a lot of this is driven by how much revenue a provider gets from private insurance, which tends to reimburse at higher rates, typically twice as high as Medicare rates, and sometimes much more than that.
13:10
So I’m looking at hospitals with the highest share of revenue from private insurance.
13:15
They got more than twice as much money per hospital bad.
13:18
Then the hospitals, with a smaller share of private insurance revenue, the hospitals that fit the best were more likely to be for-profit had higher margin and provided less uncompensated care.
13:31
While we just looked at hospitals, the same patterns would hold for other providers.
13:36
I want to take a moment just to talk specifically about Medicaid provider.
13:41
These for right, these are providers that either primarily or exclusively served Medicaid patients, and they provide crucial services, such as behavioral health and long term care, HHS, Waited several months before announcing the start of the application process for provider relief grants for Medicaid providers, and they just extended the deadline for those providers.
14:03
Medicaid providers or Opera were often operating on very slim margins at any decrease in revenue, or increase in costs due to cope in 19 would likely be particularly challenging for them to absorb.
14:16
Also Medicaid providers could end up facing cuts in reimbursement rates.
14:21
States often cut Medicaid reimbursement during economic downturns as a wave as a way of saving money.
14:28
To help states manage the cost of Medicaid, one of the earlier coronavirus packages that was signed into law included a 6.2% point increase in the Federal share of Medicaid funding or the F Map.
14:41
However, that increase in federal contribution is tied to the public health emergency declaration, so it’s unclear exactly how long it will continue.
14:50
And additionally, this increase in the federal share of Medicaid is unlikely to fully offset state revenue declines at a time when we expect Medicaid enrollment to be increasing further straining state budgets.
15:03
You know, as Billy mentioned, the house would increase this F map aid.
15:07
So that’s all I have for now.
15:09
On the last slide you can see a list of TFS resources related to this topic.
15:17
Great, Thank you so much, Karen, and just kind of a definitional follow-up, if you don’t mind.
15:24
You know, what you did a great job outlining the differences between Medicare and Medicaid and Safety Net providers, but just, you know, maybe for those who, who, no haven’t gotten as much into the weeds, I mean, what can you say a little more about the difference between Medicaid providers and Safety Net hospitals? Like, where’s the overlap, and what are the differences?
15:46
Sure.
15:46
So, the Safety Net HHS did provide extra money to safety net hospitals using an eligibility formula that they created to essentially try and ensure that it’s hospitals that have lower margins, are treating a higher share of Medicaid patients and providing more uncompensated care.
16:05
Some of that specific Medicaid providers, we’re thinking of aren’t necessarily hospitals, it’s, you know, providers that provide a lot of long term care, services, behavioral health services, some of the community health centers, So, non hospital providers that are really focused on Medicaid populations.
16:31
Great. Thank you so much for that clarification. So, now, I’m pleased to turn the conversation over to Ken Kaufmann of Kaufman Hall. Can go ahead.
16:41
Thank you so much, and thank you for inviting me this afternoon. So, I’m going to talk about the evaluation of the actual financial damage done to the provider hospital community, and sort of look at where we stand at the moment.
17:00
So, we did a recent report for the American Hospital Association, looking at what has happened over the April, May, June time period. And we focused on one metric. In order to keep things simple, the operating margin and the operating margin courses is the amount of money or loss that hospitals are incurring in the difference between operating revenue and operating expenses. So, in the past, the typical median for the operating margin for hospitals across the United States, is about 3.5%. So, generally, hospitals run on pretty thin margins compared to organizations that operate in different industries.
17:51
In the first quarter of 2020, which included sort of 2 to 3 weeks of coded cases. The median margins fell to less than -2%. So in other words, we started about 3.5% and then the median went down to less than 2% in the first quarter in the second quarter. When we saw Coburn cases throughout the quarter, the immediate margin fell to less than 3%.
18:26
We should probably talk about what happened in, in the second quarter because it’s pretty important. So the kogod cases hit across the country, although they were concentrated in just particular areas at that time. But all hospitals across the United States had to prepare for the kogod cases. So they assumed, took the responsibility for additional expenses in order to get ready to take care of the kogod cases. Or, in fact, in other, in some areas, actually take care of those cases.
19:05
But what happened next was the real financial damage, That was, many hospitals decided that, because of the covert situation, they had to stop elective surgeries and elective outpatient services from come into the hospital. So they shut that off. In other cases, it wasn’t the hospital’s decision that was a regulatory decision where many mayors or governors across the United States, instructed hospitals to stop serving elective surgeries.
19:38
This went on for roughly about two months and hospital revenues across the country. Generally, wound up being about half of budget. So, take it that a hospital expected to have revenues In the month of April of $100 billion, many of those hospitals, in many parts of the United States, wound up with only $50 million.
20:03
The losses were really dramatic in every size and type of hospital in the United States, That’s when the care funding kicked in and without the Cares Act, funding, the quarter to margin would have been -15%. So, that gives you all an idea out there of how important the cares funding was. I talked to hospital CEOs all the time, but it’s just part of what I do and a number of them are reported to me that without the Cures funding in that critical April, May, June period. There would be a good chance that they would not have made it, through that period, that they would have not been able to make payroll.
20:49
So, then, what is the, essentially, the slope of the Recovery curve? The slope of the revenue curve?
20:56
So, as, if you’ll just recollect that that some hospitals were at 50% of expected revenue in April and May.
21:05
How soon will that with that revenue come back into what level would come back, would come back to 100%, or 95%, or 90%? And so we’re watching that very carefully. That has been complicated by the fact that we’re having another surge now. We’re having that serves generally and other places where we didn’t have the surge before. But this has really become a whack a mole thing with hospitals just trying desperately to stay ahead of what they either expected or didn’t expect to have. Nobody really able to follow it very well at this point It, so, our projection is that, without further government funding the immediate enlarge, it will fall perhaps as low as -7% in the second half of the year. But, depending on the path of Kobe, which as I just indicated, none of us can really figure out at this point.
22:07
Are we going to have a surge back in the mid-west? Are we going to have a surge back in the north-east? I know that that cases were jumping back up in Wisconsin, jumping back up in Missouri. And I know the governor of Illinois very concerned about Southern Illinois. So our, our projection was the median margin would be any range from 1% to -11% by year’s end, depending on what demand development to occur because of the cat path of the disease. Then, very importantly, the impact will not be equal for all hospitals and we’re already seeing. So we think half of America’s hospitals could have negative margins between now and the end of the year.
22:54
But it’s extremely hard to predict which of those hospitals will have negative margins in, which of those hospitals will begin to recover. We are beginning to see that some of but at least very unscientific basis, it appears that some of the academic medical centers are coming back very quickly, and perhaps community hospitals coming back to us.
23:19
And so what does this mean in terms of hospitals, in their communities, well, hospitals with weaker financial health are going to be forced to contend with the immediate pressures on their ability to perhaps survive or thrive. Many hospitals are already understanding that they’re going to need to make major changes in their cost structure in order to adjust to a loss of revenue, whose exact level still remains unknown capital. Projects, and capital budgets all over the hospital, business across the United States have been either pause or stop entirely and then you all know that workforces have been impacted in a significant way. We’ve had furloughs and then we’ve had actual layoffs.
24:07
But I would say up till this point, the furloughs and layoffs actually having wound up being as severe as you would have expected given the numbers that I just, that I just reviewed. I think many, many hospitals have tried very hard, not to permanently impact their workforce as they try to figure out exactly where they’re going to wind up from a code perspective and exactly where they’re going to wind up from a financial perspective as this thing continues to move forward. So, I will stop there, and I look forward to answering any questions anybody may have. Thank you very much.
24:48
Great. Thank you so much. Can a lot of great questions, and we’re getting some really great questions already, kind of coming in from the audience. So we’re gonna get to that. Please go ahead and fill them and can let me ask one that’s kind of related to an audience question, which is kind of around telehealth and have you seen any impact, you know, improve revenue from hospitals or health systems that are using telehealth? Or is it too early to tell what the impact?
25:17
Well, mean, Telehealth wasn’t savior. I mean, there’s absolutely no doubt about it with the history of Telehealth. Provider healthcare’s rather remarkable in how slowly developed compared to the use of telecommunication and other industries, but once that covert her hit, patients had to use it. And doctors had to help out. And that resulted in amazingly significant changes we had. We had hospitals report to us.
25:54
That dead in it, they were doing 500 telehealth. The day before co bid, and then after COPPA, they were doing 5000 a day. I mean, there were just all that kind of thing. And, and a number of the payers, and, of course, Medicare pitch in, and agreed to pay much better dollars. For the telehealth visit, But I don’t think we’ve seen any analysis that we can count on as to how much it helps. It certainly helped in that, in that it gave doctors, and hospitals the incentive to really jump in and do. everything they could from … perspective, And protect their patients from that ongoing, from that point of view. But, I don’t think we can. We don’t have an analytic yet. That tells us how that turned out financially.
26:49
Great. Thank you to follow up with 1 other 1. And since it is pertinent to what you had mentioned around, you know, not all hospitals are kind of being affected. The same somebody in. our audience asked, what explains why academic health centers appear to be rebounding more quickly than community hospitals. Do you have any insights that you can offer there?
27:12
Yeah, I do have an insight, and basically over the last 20 years, academic medical centers have worked incredibly hard to differentiate themselves by accumulating very capable doctors being able to do on a consistent basis very high-end tertiary and quaternary care. I think we can all speculate that as because those are individuals who really needed to get back to their care. They pause, did while the kogod virus was, was in full rage and many of the academic medical centers were not accepting any kind of elective care during that push, that that part of the of the pandemic, But once they had a sense that the hospitals provided safety measures. Those people who wanted to nip one didn’t just want, they needed to get back as quickly as possible. And I think that’s a differentiator between the academics in the community providers.
28:20
Great. Thank you so much. that. that’s helpful. So, Ken, thank you. And I will now turn it over to Susie, decide from S&P. Thanks for taking a break from earnings season to join us. Thank Sarah, and thanks for having us, and hope everyone is saying well, unhealthy out there. And I’m going to talk a little bit about the non for-profit hospitals and cove it from a credit rating standpoint. And I think a lot of the comments actually resonate with what can just talked about, as well as Karen and some of the folks earlier. But before I do that, I just want to level set a little bit, so we can go to the first slide, just what we do, and who we are. So, one more slide, please.
29:02
So we provide credit ratings, which is the likelihood unwillingness of issuers to pay their bonds. And bonds are generally issued, as, you know, for strategic initiatives like capital and technology and all of that good stuff. And, as you know, hospitals are very capital intensive sector. So, in order to determine that we have specific criteria we use for acute care hospitals.
29:26
And that criteria incorporates a model, but also a lot of analytical judgement and understanding of the sector, and discussions with management teams about what’s going on for that particular credit.
29:38
Our ratings are reviewed annually, and we update that with data, as well as discussions with management teams. We read about 420 hospitals and healthcare systems across the country. And if you include all the health hospitals that are under every all those bigger health systems, it’s quite a big. It’s a good representation of what’s going on in the sector. And, the hospitals we do rate vary from small, critical, access hospitals to community hospitals, academic medical centers, regional health systems and multi-state systems. So, if you go to the next page, and not to get into the weeds on our criteria, but just to give a snapshot of what we look at, because this is going to impact how we’re thinking about the sector right now. We obviously look at a lot of the financials for the non for-profit hospitals, including their performance and their balance sheets, and the debt that they have in the liabilities, but really, what’s informing that is what we call it, what we look at as the enterprise profile.
30:35
So that’s who’s who’s, who that credit is, where are they located, what kind of service area are they in? What type of services do they provide? Ken talked about the academic medical centers which are different breeds in the children’s hospitals. We look at the medical staff, how integrated they are, what their strategy is. So it’s a lot. And the big, big piece, which I know we’ll talk a little bit more about, is the payer mix of that hospital, and what that’s made up of. So is it Medicare and Medicaid, commercial? Do you have multiple Medicaid? If you’re sitting on a cross state type of system, then we look really at management teams and the governance to really understand what the strategies are. And, that really informs our view of a credit and the strength and the stability of that credit, and the risks that are there.
31:24
So, if we go to the next slide. So, entering into 2020. So, this is a slide actually from our stable Outlook that we had back in January, and you can see there were a lot of pressure is actually just coming into the sector before covert even hit. But, obviously, once Cove it hey, we did revise our outlook to negative on the sector, which doesn’t mean that all of our credit ratings went to negative in terms of our outlooks. But, it what it meant was that we just thought that there was more likelihood of credit and, you know, credit changes to the negative side. Be it outlooks, or be it rating downgrade. There were a few items here, though, that I just want to highlight with the management strength, financial flexibility in business profiles that we’ll talk a little bit more about. But it really helps some of the credits that we rate maintain stability during this very challenging time.
32:12
So if we go to the next slide, just a quick snapshot of our credit rating distributions. As you can see, we rate from double AA plus down to speculative grades. So it does vary. But you can see the non for-profit acute care hospitals generally are in the investment grade, which is everything above triple B minus and above category, but you can see that standalone or a little bit more riskier, they skew to the right there a bit towards the towards the low A category, triple B and then the systems are at the higher end.
32:45
What’s interesting here is, looking at our Outlook, so we, we do tend to look at things from a standalone versus system standpoint. Systems are generally, those hosts, those credit, those hospitals that have more than three hospitals, under there, under their system, but generally have even much more than that. But you can see here the outlets, when we were at the end of last year, we were, you can see where the percentages were and how those kinda ballooned. Kind of as of June 30th. And we went from 14% negative Outlook to 26% on the standalone. And even the systems which are generally more stable, they went to 17% on the negative Outlook. So, during this time, though, I will say we’ve tried to take a measured approach to our credit ratings.
33:28
And, really, what you’ll see for the outlooks that have been changing are those that have weak liquidity, weak business positions, generally in the speculative gray or lower rating categories, or those credits that have had challenges just coming into the pandemic. So, even before the pandemic hit, they were already going through some operating challenges or balance sheets stress. So, that’s where you see more of the Outlook changes.
33:52
And if you go to the next slide, you can see that we still have a fair amount. These are all the credit ratings that we have reviewed through June 30th, and we’ve had a fair number that have maintained their, their current rating. And that’s where I say we’ve taken a measured approach, and some of these credits are holding, holding steady for now. But you do see a significant number that have had unfavorable outlook revisions, meaning they’re probably going to a negative outlook, and some downgrades as well. We’re a little bit ahead of where we were last year on downgrades, and then, you know, very few sort of positive, any positive indicators there. So, that’s kind of how our ratings have performed.
34:31
And if we go to the next slide, this kind of gives a little bit of the story, then, where are we today? So, we’re here in August, and I think Ken, and highlighted some of the challenges that all the credits went through in March and April, Again, it wasn’t very, it wasn’t even for every credit, but certainly all the credits experienced some level of stress As we sit here in August. We have seen Symbolic, we’ve seen good volume Recovery in May, and June, and July, or sorry, starting maybe at the end of May, June, July, August. Like Ken mentioned, that’s getting a little muddied by some of the searches that we’re seeing across the country in different markets. But generally, and I think similar things that we’ve seen that, some of the academic medical centers, those places that are serving tertiary, quaternary kinds of services, those are coming back but we’re also looking at, is pent up is this pent up demand because no one’s gone to the hospital for a couple of months, and how is that flowing through? And is that going to hold up?
35:30
Especially as patient behavior may change just given the social distancing and some of the concerns around health and safety. So really watching that. So we do think it’s going to be an uneven volume recovery.
35:42
As we see these ebbs and flows over the next next several months to going into early next year.
35:51
We don’t think that we’re gonna see that full shut down. Again, we’ve seen even in the surge of markets that they’re continuing to provide some of that elective and non emergent care. But it really is kind of complicates things for hospitals as they have to deal with these mini searches, and how to manage their coven and non kovac cases. The other big thing, and I’m sure we’ll talk more about this is the recessionary environment obviously shifts in Medicaid. We’re keeping a close contact with our state rating. Analysts.
36:16
As states are under a lot of pressure, those cuts, and then also looking at the underinsured and uninsured perhaps, also causing some challenges There. Challenges being weaker, reimbursement, and potentially lower volumes. As people delay delay, getting care if they have to do more out of pocket, so these things are all going to lend to you know margin pressures over the next rest of this year, probably going into next year. Won’t be the extreme that we saw in April and March, March, and April. But we do think that that’s going to be a negative headwind there. And we are seeing you know, the staffing increase staffing, costs increase, supplies are increasing. And, so, those are those are things that we’re watching and how that that moves through the system and how the volumes continue to be affected. And of course, the Federal Stimulus Grants have helped and you know, it’s certainly blunted the, the, the the Margin pressures that we saw in the second quarter.
37:14
But, we’re, you know, as the map funds, are having to be repaid. A big question is going to be cashflow and will they be able to be paid off without impacting the balance sheets. And also, you know, the lines of credits and other things that hospitals have use, will those be able to be paid off, or will they need to, to, to keep those on there? And what does that do going forward for these hospitals? So, where we stand, you know, credit fundamentals matter, we still think, are stronger credit, those, that are, you should be able to better withstand the pressures from the …. But prolonged stress could really, you know, could, could cause some challenges. Their management teams are working on expense cuts, I think. And Ken mentioned that, and I think being that, we haven’t seen what that new normal is, it’s hard to make the big strategic cuts that might be necessary. But, there’s certainly looking at those and thinking about those going forward, we think the credit quality gap is gonna widen so. The stronger credits are going to continue to church prolly Stay Strong. And, the weaker ones are gonna have a hard time, seeing being able to kind of stay stable, but also then re-invest.
38:15
Because that’s going to be very important going forward to continue to re-invest with technology with the capital needed going forward. So, and I know we’ll talk about other, many of these things here, But a lot of these other things, like health policy decisions, the election, how those all affect health care going forward. You know, it’s certainly a question mark. And, you know, the government is gonna be under a lot of pressure from having done all this support, so Medicare is going to continue to be a focus and cost cuts there. So, I’ll pause there, but I’m sure we’re gonna get into more of these as we continue the discussion, but happy to take any questions.
38:49
Great. Thank you so much, Susie, that this is really great and you’ve covered a lot of ground here. I want to ask you, kind of a little bit, an operational question. You know, when you, when you talk about things like unfavorable outlook revisions.
39:04
And then just the very few, sort of favorable.
39:06
I mean, if you’re a hospital, CFO, you, you talked about this a little bit but what do they do with that information and get the unfavorable atla revision.
39:14
No.
39:17
You mentioned kind of cutting expenses, things like that. I mean, are there, are there decisions that they make based on that. Tell me a little bit. Tell us a little more about how kinda interaction happen.
39:27
Sure, so, yeah, so our outlooks basically just indicate where we think that credit rating is headed over the next couple years, and it’s a one in three chance that we think that rating could change downward if it’s an unfavorable. So, you know, the hospitals, then, there may be things out of their control, and, you know, they are?
39:48
no, so they, they, They’re managing their business, and sometimes that affects the credit rating, and even … that, that might have affected the credit rating. And the outlook. And we put it very detailed view of, like, what we expect. you know, these things happen, it’s likely that the ratings going to go down. And these things will hold its stable. So, it gives them a good guideline about what they need to, what, what, would cause the pressure to change it now, whether hospitals will go and make adjustments, you know, that’s really kind of based on what they were, where they’re at in their positioning, and they may be executing on a strategy, and they still need to implement Epic, and they’re gonna have to keep going, and move through that, and that just might be a rating cut. So, you know, to them, it really is to look at it and say like, Well, what, you know? What can we do? What changes can we make? And they’re probably doing that anyway, because you know the margin pressures they’re feeling and the investments that they need to continue to make.
40:38
Then it’s really, sometimes like the decision is made that, know, it’s the rating, is no a secondary thing, and they need to keep moving forward. But they will go, and, you know, If they, if they feel like they can adjust, they will try to adjust their revenues and expenses. If that’s the issue. But If it’s a balance sheet issue, it may be something that might be you, know, a little bit harder to, to, you know, to, Especially, given the markets and the way things are moving to be able to adjust. So, it really does depend on the credit, and where they’re at, and what what’s in there, what’s in there, what they can do, and what things are out of their control a little bit, and what, what their strategies are to do.
41:16
It’s one factor, but not the only factor. Yeah. Great. Thank you.
41:22
Well, thank you for this presentation. So I will now turn it over to Mark Miller, who has some kind of wrap up thoughts and reactions, and then we’ll get into the Q&A and keep those questions coming, They’re fantastic, we’re gonna get to as many of them as possible.
41:39
Thank you for that. Sarah, so just a couple of things to get started, you know, given the depths of the economic downturn, and the how critical the public health emergency is, I want to be very clear that. I think it’s absolutely important that the Federal government intervenes to stimulate to bail out to support families, businesses, and ultimately health care providers. But I also think, for those of you who work with Congress, it’s also important to keep in mind that, from a budget point of view, we didn’t plan for this, and we’ve been carrying very deep debt for many years now, seems to be about the size of autonomy. And an economy that shrinking, meaning the ability to pay it off, is somewhat compromised.
42:33
So I think, you know, my starting point is, is we should we should be judicious about how we think about the support that we provide to the health care sector.
42:44
Because healthcare providers are not equal in their ability to kinda sustain and work through this crisis, and so thinking about the 60 billion that hasn’t been allocated the potentially up to another 100 billion that could be allocated the request to forgive the accelerated payments. I sort of think about support in two ways. one is helping hospitals, for example, or in other providers but probably, fundamentally, hospitals with the unanticipated code that expenses of, you know, P P E, ventilators, you know, the increased cost of, say, an inpatient admission related to that? I think That’s a legitimate should be. some attempt an accounting and then, you know, helping the hospitals on that front.
43:38
I think a lot more tricky, though, is lost revenue.
43:41
And I think, you know, if you’re following this, the discussion carefully, on the one hand, you can hear some of the information that was presented here today. How difficult it is for the hospitals. But, if you’re following sort of the second quarter reports and I don’t mean just for say providers and hospital systems, you’re seeing in a very profit profit margins for drug companies, insurance insures. Then also, some of the large hospital systems have been coming in with very profitable second orders.
44:16
High degree of fan, a cash flow. A real shock to me is some of these hospital systems have reported very deep reductions in their cause. This is an industry that has generally argued that it has very high six costs can only change cost over the long run, and yet seem to have responded pretty quickly.
44:39
And so, I want to be very clear, this is not the hospitals, so this is some hospitals, and kind of related to what Karen was saying. She was pointing out that some of the early allocations tended to go to the hospitals that had more revenue in part. That’s because it went into hospitals that were able to charge and the commercial sector much higher prices. They often had a strong market position. Some were able to extract. I am.
45:10
And so one thing to think about in allocating is both the financial health of, say, the hospital, and also the market position of the hospital and its ability to extract high prices. And when you replace revenue or you’re replacing revenue that’s critical to keeping the hospital, Ronnie, or are you were replacing revenue. That’s far as an excess of, say, their cost structure.
45:38
So when we think about the principles around distribution, we tend to think of focusing on financially unstable providers. And I think we would look first at the all payer margin as opposed to the operating margin, which is much higher. It was about twice as high as the operating margin. On average, it takes into account a broader set of revenues that the hospital has available.
46:04
We would focus on hospitals that are surveyed Medicaid and on a lot more uncompensated care, which tends to go hand in hand with a lower all payer margin.
46:17
Say hospitals that are critical to access that. If this hospital closes, then, you know, that the ability for people, say in a rural area for a 50 mile radius would be unable to get health care.
46:32
Then, by way, and I’m gonna sort of start to close here, the other, the other just couple of things I would say is, is that hospitals and other providers can, in fact, change. I mean, it’s often an action foreseen event. A question about telemedicine. I mean, there wasn’t a lot of telemedicine.
46:51
Then, there was a lot hospitals have shown that they can contain their costs if they’re put under pressure.
46:58
The other thing I would say is that we shouldn’t be, as an objective to trying to get back to normal normal, was an extremely expensive healthcare system. You know, for all of the actors in it, mediocre quality, it was complex, and clearly market failures, like, surprise billing, and, say, you know, the ability to extract really high prices in the commercial market.
47:27
And that leads to my last thought, which is, I don’t think it’s unreasonable that in targeting this help from the federal government, even if it goes to well, to-do hospitals or to poor hospitals, it is not unreasonable to ask for things like refraining from surprise billing for, say, 20 20 or 2021 or refraining from price increases that are faster than inflation for 2020 or 2021. Because to the extent that we can control our healthcare costs, then families and businesses have a better shot at getting back on their feet and back to work.
48:08
I’ll stop there, sera.
48:12
Great, Thanks, Mark, for those comments. We have gotten a ton of questions from the audience, so we’re gonna dive right in. First, let’s just get a little bit more of the landscape, and then we’re going to talk about kind of who has been affected and how. Then we’re gonna get into some questions that we have received, a number of them around the 60 billion, the remaining 50 billion, and provide a relief that hasn’t been allocated. And then, and then there are a number of other questions that will get you. So first, let me just ask about a couple of specific types of providers that, that our listeners are interested, and no one is rural and rural hospitals, and, you know, maybe, Susie, and can if you have sort of some initial thoughts on that?
49:04
What have you seen as a differential impact, if any, around rural hospitals?
49:07
We know that there have been challenges, and I’ll add an all girl provider, it’s really, as you have looked at your analysis, do you want to start us off?
49:18
Yeah, so I think the rural hospitals have been obviously under a lot of pressure for a number of years. So this is, you know, a double, a little bit of a double whammy for them. You know, to the extent that they have partnered with the larger systems. I know in some cases, we’ve seen that where they’ve partnered and tried to right size their facilities. You know they were maybe less impacted because they are now absorbed into a bigger system. But for sure, you know. They they were feeling no significant effects from the pandemic. And, you know, certainly a place where, investment and and how to care for those patients in the right way. I know there was a lot of telehealth and tell, you know, telehealth, tele technology going on to something that’s been historic. So, to that extent, you know, to the extent there are wired in, that, sort of helpful going into this, but, but certainly, that’s not the answer for, for all of their challenges that they have in front of them.
50:17
I would. Yeah, I would just note that, obviously, rural hospitals in America have been under tremendous pressure for the last 10 to 12 years.
50:29
And it’s not getting a lot better, well, we could do a whole separate symposium on that.
50:36
I did have a CEO who was a large rural network tell me, however, that the emergency payments he got for being a rural organization were actually much larger than what he got from the Cares Act.
50:52
So, if that was true across the board, then then the federal government recognized that the many rural hospitals could, could be significantly at risk of not being able to make payroll, are actually running out of money. And they, they seemed to bend over backwards to make sure that didn’t happen.
51:20
Great. Thank you. We also gotten a couple of questions around independent primary care practices or ambulatory providers, and I wonder if anyone on the panel can comment. Karen, maybe even looking a lot at the data on sort of how this has been distributed.
51:37
I mean, do we know how much of the relief has been distributed to, you know, either independent practices or ambulatory care providers as compared to hospitals?
51:49
Yeah, that’s a great question.
51:51
I mean, to the extent that an independent provider or no an ASE or anyone else either was a Medicare provider or a Medicaid provider, they would be eligible for provider relief grants. That amounted to 2%.
52:08
They’re not patient revenue.
52:11
So we didn’t know that.
52:12
It’s hard to know, unfortunately, what share of the money that’s been distributed went to those providers.
52:19
Ah, You know, in part the HHS, I think, has actually been more transparent. And they were required to be under law and have released lists of how much money has gone to each provider.
52:32
But, you know, our providers have gotten money, and at this point, there’s about 300,000 providers.
52:38
We’re scared and the HHS doesn’t go through and categorize them by type of provider, and obviously, at that point, it would be a tough fogg for anyone to do that by hand, so we don’t have a great our sense of what share of the money has gone to those smaller providers.
52:57
Thanks, Karen. And I wonder if you could comment too and, you know, there have been several sources of funding and I will point out the Alliance did a briefing our webinar on primary care specifically back in May. And of course, there were a number of challenges including challenges accessing the PPP Loans. Billy, anything on your end are something Congress is looking at, or, or HHS, or how do we think about this issue?
53:32
Um.
53:35
No.
53:37
We’re having a little trouble hearing.
53:41
Hello?
53:44
LA, I think we’re losing your audience while fully calls back and we’ll hold that question but I would refer those who are interested in primary care to check out the Alliance’s may 20th webinar. In addition, we also did hold our overall webinar kind of earlier on, Sell something else that we can look at.
54:05
Great, let’s talk about the, the 60 billion and I will also recognize that there is a giant tropical storm happening in the DC area. So, hopefully we can all day on the internet. There have been a lot of questions about the the unspent rebellion. And so let me, let me first start with a specific one of them, and maybe we can go more broadly.
54:26
Um.
54:27
So one of our listeners asked about in particular, the money to treat uninsured coven one thousand patients. So those unallocated funds to treat uninsured patients refers to one statement that an HHS official has made. That said that they’ve only paid out 340 million so far for that purpose with much less than they anticipated.
54:52
What is going on? There are providers just not taking advantage of those funds, is it slow to be allocated Karen Divi? Any insight for us on that the funding specifically for the uninsured?
55:05
I mean, I just checked today and that figure is about right. It’s about 350 million that’s been paid out so far, in claims. It’s hard to know exactly what’s going on. For some individual doctors, they may just not be aware of the program. Larger hospital systems you would think would be aware.
55:25
You know, one issue we’ve heard is that the patient had to be coded.
55:31
I was covered, 19 is a primary diagnosis and for some patients by the time they get to the hospital, you know to the Saturday of other serious issues that may have been caused, by Coburn 19, those serious issues may be the primary diagnosis. So, some of it may be some of the requirements around billing.
55:58
Thanks so on as we know from the earlier stages of the pandemic in particular, and maybe perhaps still continuing to, this day, you know, people haven’t necessarily been routinely tested or they even people early on with very severe symptoms couldn’t necessarily get posted for that that may also have had something to do with it to come here or something.
56:22
Yeah. Yeah, Thank you. So, so let me just ask kind of another another question along those lines. You know, we talked, most of you really talked about kind of this issue of kind of speed versus accuracy in terms of actually allocating the funding.
56:43
And, and so, I wonder, you know, initially, if, if, you know, maybe if you were in the head, the official, that HHS, with it, you know, a matter of, let’s try to get as much money out the door, more quickly, I mean, is that why the funding went to Medicare providers initially?
57:00
And going forward, you know, if you kind of had a magic wand to wave, and you could think about allocating and distributing those funds in a way that would, you know, that you think would be, would be more fair. How would you go about doing it? I mean, would you change the formula? Like, what? What would you be thinking about? Anyone want to start with that?
57:28
Well, Sarah, there was a couple of things that I was trying to say there towards the end.
57:34
I think we would look at, this is Mark. I’m sorry.
57:39
We would look at the financial staff, say, like focusing on the hospitals so far since the, the talk has really had a lot of focus on focusing on the financial status and throughout the all payer margin as one measure. But there are also other things, cash flow measures that have been spoken about and talked about in general, and in in this presentation.
58:08
Portion of your cases that are Medicaid and uncompensated care. Then the, how critical the provider is to access and that one, is, is a bit tricky in the sense that, you know, if you’ve had a rural hospital in which that hospital goes down, there’s no access. That’s pretty clear if you’re in an urban setting and there’s four hospitals, you may begin to look at things like occupancy rates, and that type of thing, but the focus would be on the financial status.
58:44
Then, you know, serving or acting more as a, a safety net provider. I think there was, I think you’re right, there was a real attempt to just get things out the door.
58:57
But also, I think there was a real recognition pretty quickly, that I think HHS was very surprised by how fast the money racked up in the accelerated payments in Medicare. Then I think some of the comments that can just made and some of the stuff that was reflected in Karen’s presentation, there definitely was much more of a turn to trying to targeted after the first. Waves went out and really, we’re kind of tracking to revenue, is as Karen’s presentation chip.
59:35
Great thing. This is, this is Cam.
59:41
No, I think, I would be the first one, to criticize H’s. Just have to go on record for that.
59:49
Um, I think they made the best decision, they could, under the circumstances. They use the metric that was easiest for them to figure out, which was everybody’s Medicare payments. It was a number that they were able to to get ahold of.
1:00:09
I would guess, within minutes.
1:00:12
Push a button, and there it was for every hospital in the United States.
1:00:17
And so, that was, that was, know, anything else is gonna get complicated, was going to cause delays. I think what they really, really didn’t want to have happen, was begin to have hospitals report, that they were unable to make payroll. And we’re laying off Americans in this situation, thereby making the economic situation, even worse, because the money has not got node in a set devastation and quit manner.
1:00:51
So under those circumstances, I think they did the best they could.
1:00:57
But, you know, you can certainly see that that that wasn’t necessarily the fairest way of distributing the money, but it was the fastest way to distribute it.
1:01:11
Thanks, and we gotta, we gotta kind of a follow up question from the audience.
1:01:14
I mean, going forward, is there, you know, is there a straight forward formula that, that would, you know, kind of better target some of the funds to the providers in the greatest financial danger who serve the lowest income, most vulnerable patients? You know, how does that, you can, you know, you kind of alluded to the back end kind of data infrastructure. I mean, we know that, like, with Medicaid, you know, you’ve seen one Medicaid program has seen one Medicaid program, so, I mean, what, what’s realistic going forward in terms of, you know, looking at, looking at the data, Looking at the numbers. Anyone, wanna take a stab at that?
1:02:06
Can you hear me?
1:02:08
Yeah. OK, this is Filip sorry, I was having difficulty earlier. I’m not sure what happened there. I’ll take a stab at it. I mean, I guess, kind of broadly speaking.
1:02:18
one challenge we face, I think, is the sort of preexisting financial vulnerability of hospitals aside, which I totally agree, should be an important part. Maybe not the exclusive, you know, component of the formula, but A powerful one.
1:02:36
But in terms of identifying hotspots, et cetera, you know, that analysis is, to some degree, necessarily post hoc. And so, there is this the lag in delivering funds to the parts of the country.
1:02:50
Don’t need them most.
1:02:51
And that lag is too old, you know, unnecessarily due to the political dynamics afoot here, including know, the failure of some not naming names to, perhaps take the pandemic as seriously as it should have been as soon as it should have been.
1:03:10
So, now, hopefully, to some degree, we’re on the same page in that regard. But you’re still going to have the technical challenge of, you know, it’s, I don’t know, if it is feasible.
1:03:21
Perhaps, some on the call do, to have, you know, kind of predictive modeling, that would be reliable enough to base funding on it. But in a more perfect world, you know, we would be looking at things like that.
1:03:36
And obviously, our government, you know, would be have the capacity to be more nimble in delivering funds based on what that data would suggest.
1:03:49
Great. Mark, Mark, you mentioned kind of an all payer standard, as opposed to an operating margin standard.
1:03:55
Or I wonder if you could just quickly kind of comment on, no, the kind of data that may or may not be accessible to, to follow up on what you suggest.
1:04:09
Yeah, and that’s, that’s part of the reason that I suggested in an all payer margin.
1:04:15
Um, so that, you know, the difference between an operating margin and all payers is that all paring encompasses all lines of revenue and other sources of income as opposed to just and I’m sure can those definitions better than me and Susie as well, I’m sure. As opposed to, you know, the, the, the operation, meaning the delivery of services, to the care that is organized around the patient, and so you can have other sources of revenue that would count into your margin. And the reason that I pointed to that is the operating margin. Ken’s work was about 3% I think if I remember’s presentation properly, the Altair margin is, again, I’ve been running about 7, 6, and a half between 6 and 7 for the last several years. And I think it kind of speaks a little bit more broadly to the to the broader financial else, or lack of for a hospital, that data is available, and the reason that the other reason I attached to it a bit.
1:05:22
You can get it out of the cost report pretty directly, the Medicare cost reports.
1:05:27
And so I feel like it’s pretty accessible, know, the Medicaid and uninsured in percentages, either as cases or the uncut or sorry uncompensated care. Amounts are also obtainable and could could be used. And so tired of the metrics that I was. And then I tried to say, You know, the the critical for access is a bit trickier, but at least, some of those metrics are pretty available to CMS, through either their cost reports will, primarily to the cost reports, I think.
1:06:14
Great, Thanks. Ken or Susie, or anybody else, do you have any any additional thoughts on that, unlike the data that that might be available?
1:06:26
This is Karen.
1:06:27
I would just add, you know, there’s been some talk on this call uncertainly, the presser on the Next aid package, around the Medicare advanced payments. And either forgiving, some of them are making stretching out.
1:06:44
Creating a more favorable time period for hospitals to pay that back, and I just, and there’s no equivalent federal advanced payments in Medicaid.
1:06:52
Some states, I’ve provided some advanced payments to certain providers.
1:06:57
But, you know, to the extent that people are looking at new ways of helping providers, you know, thinking through which providers maybe you’ve gotten watched helps so far.
1:07:07
I may still need more assistance may make sense.
1:07:14
Thanks, Karen.
1:07:15
And, know, we talked a little bit about Medicaid and you had raised some of the challenges around state budget and Susie as well.
1:07:28
Well, you know, that’s not a specific form of aid per se. You know, if the payment structure for our coverage program Medicaid.
1:07:38
I just wonder if, you know, if you are other panelists to sort of, talk about, you know, more specifically, the how, How are you thinking about Medicaid as a source of provider stability going forward?
1:08:05
Sorry. Was that to somebody specific?
1:08:08
Yeah.
1:08:14
Just going to jump that, If Karen. No, No, excuse me. Why don’t you go ahead, and then I can fill in?
1:08:21
Yeah, so the Medicaid, I mean, it’s a really interesting, it’s an interesting one, obviously, varies. You know, 50 different ways and what different levels of support are out there. I mean, we have a lot of providers that on top of Medicaid get provider fee program or get provider fee funds and other supplemental funds from state, So we do look at that holistically. But, in certain states, it’s, you know, in certain credits. And I think someone mentioned earlier, like, it is going to be very credit specific Medicaid. You know, we are concerned because of some of the, the challenge. It’s the biggest part of some of the state budgets.
1:09:00
And those cuts, you know, as they come through, or if they come through, you know, that would be it, you know? Especially for those Safety Net and some of the hospitals that have more medic Medicaid exposure, that would be a challenge. And so it is something we’re watching, but we also look at it with those provider fees, and it gets a little complicated there, but those seem to be like holding up right now. And it really would depend on sort of what your exposure is to the Medicaid. So if you only got three or 4%, or 5%, 7%, you can probably adjust, Obviously, when you’re a children’s hospital, it makes it a little bit harder. Those are exposed to Medicaid? quite a bit, So, you know, it’s a, it’s a good, it’s a, it’s a, it’s all, it’s all, It’s not the best funding source for hospitals, but with the map, it’s helped. And obviously, with some of these additional supplemental funds, it’s, it’s held up, but it’s definitely area of concern for our hospitals.
1:09:53
Yeah.
1:09:56
Sure.
1:09:57
For some providers providing like behavioral health and other services, you know, often Medicaid is really their only source of revenue and when, you know, states don’t have a lot of option when the economy is weak and may type revenue, you know, at the very time when they might be seeing higher cost.
1:10:19
So, I think a lot of those smaller providers are quite quite vulnerable right now.
1:10:26
And we did have a follow-up question on Medicaid from the audience.
1:10:30
Around the deadline for the Medicaid portion of the Provider Relief Fund and asking why that deadline has been delayed multiple times. And, you know, just this person kind of reflect them. Uncertainty about what the barrier maybe? Do you have any thoughts on that? Karen?
1:10:51
You know, I haven’t spoken with providers directly, but, you know, unlike with Medicare, where, as Kim said, they know they had some of the data providers had provided data and cost reports before.
1:11:04
On Medicaid providers, you know, this is new data They’re pulling together and providing the CMS for the first time. A lot of these are smaller providers.
1:11:14
The FAQs and some of the technical instructions providers are getting, are continually changing.
1:11:19
So I think you guys want to a lot of confusion that may have caused some of these delays.
1:11:28
Great, Thanks.
1:11:30
Alright, so for the next kind of 15 minutes or so, I’d like to turn to kind of some of the, the, the more forward thinking implications. And let’s just start with with health equity.
1:11:41
I mean, there’s been a tremendous conversation around racial inequities in health, in general, in this country, as well as we know that … have been more prevalent and more deadly among people of color. What do we know? What data do we have around you know whether federal relief is reaching providers who are caring for populations who are disproportionately impacted by the pandemic. And is there a way for policymakers to think about advancing health equity and future? Covered really fills are actions.
1:12:19
Parents, you know, you, did, you did some of the, the analysis around around safety net, and, and, and kind of the allocation there. I mean, does any of the data kind of help point to that question?
1:12:31
Sure, you know, I think, when we did our, our paper, the additional about $13 billion for safety net hospitals hadn’t been announced or distributed yet.
1:12:42
And I think for hospitals that has at least helped directionally, but we haven’t seen any equivalent money for on non hospital providers. So, things like community health centers and also other local clinics that may see more uninsured patients, more patients on Medicaid.
1:13:03
Maybe you don’t Commandos high rates from private insurance and they similarly were disadvantaged by the formula of facing grants on 2%.
1:13:17
Patient revenue.
1:13:18
And I think, you know, at the same time, there may still be, you know, some rural hospitals, some public hospitals and others that were even though they got extra assistance.
1:13:31
You know, they may be in a particularly vulnerable state right now, and, you know, at the same time, we see other providers.
1:13:39
Again, you know, reporting, you know, positive earnings, So I think it’s definitely something to keep in mind as we go forward.
1:13:51
Thanks, Kelly, do you have any thoughts from the policy perspective there?
1:13:57
Yeah, just, I was just wanted to note that the Congressional Black Caucus had a package or proposals in May, some of which were included in the Cares Act.
1:14:07
Just to try to specifically address racial inequity, and protect minority communities.
1:14:15
Because it pandemic, and just for, I mean, for one thing, they strongly advocated for and attain the requirement, that the CDC track racial demographic data in, in their tracking of the pandemic spread, and testing rates and so forth.
1:14:33
They also, there was also about half a billion dollars, specifically targeted to historically black colleges and universities to help them, you know, obviously, continue their mission and operations during the pandemic.
1:14:46
So, there have been some, some efforts, you know, directly, to try to address racial inequity.
1:14:51
I mean, the only thing that else that I could say is that, you know, it’s it’s, it’s well, I don’t know which is more difficult to take that back. But it’s hard to resolve racial inequity in the implications of our policies. Kind of on the fly like this.
1:15:09
I personally hope what we’re learning is that you really have to take a step back and abroad to you and address the systemic racial inequity and racism that we have in our health care system so that we don’t see racial inequities when the next pandemic and no other other crises hit.
1:15:29
And if I could just add one thing. Just, I don’t know as much on the policy side, but I know from our health care providers, they’re doing a lot of it. Dave, historically, especially the big, big systems, have started to do a lot more work around some of these areas and the social determinants of health, and trying to improve the equity of care, and to the extent that there’s more operating challenges. Because that’s always, that’s not always funded. I mean, that’s, you know, they’ve tried to invest in that, but that becomes an area that becomes a pressure point going forward if these systems are no more depressed from margin standpoint, and can’t do it.
1:16:03
Hmm, hmm, hmm, hmm, hmm, OK. Yeah, this is Karen. I’d just like to comment this.
1:16:09
This isn’t a problem that can be addressed now, and it can’t. It isn’t going to be addressed by the money that’s available now.
1:16:20
This is, this is a problem that’s been in the making for 60, 70, 100 years, and has to do with the way the care is provided in communities of color.
1:16:34
The lack of access, the lack of convenience, and the lack of primary physician care.
1:16:42
And the ability to too quickly identify developing problems like diabetes and obesity and others, and then find a community appropriate way of dealing with those issues.
1:16:59
And, you know, we’ve, we’ve, we’ve all, we’ve all worked to create this problem over a very, very long period of time.
1:17:09
It’s going to take quite awhile, fix it. And it’s going to take a completely different attitude on the part of our healthcare system and part of our state and federal governments to try to figure out how to change this. So that the next time one of these pandemics come comes by, it’s an equal opportunity problem. Not a problem, that is burden to communities of color disproportionately.
1:17:43
Thank you and thanks everyone for the, for those insights. So, let’s talk a little bit about, you know, payment reform.
1:17:51
And, I wonder if, if anyone, we’ve had a few questions about that. So, I’ll try to kind of synthesize them. First of all, I might, Susie from your perspective to start with this, but obviously would love for others to jump in.
1:18:07
You know, have you noticed risk bearing health systems or, you know, systems that are moving more towards value, value based care, demonstrating better operating performance or you know, how are they doing in this pandemic compared to the more fee for service heavy.
1:18:30
So, it gets a little tricky here, but I will say, on the hospital side, you know, those that had, obviously, the, integrated providers that had the insurance and did, Had, that, you know, capitated revenue coming in, have fared better, just having that, Hedge net natural hedge.
1:18:51
So, I think, you know, and in terms of, you know, if you had capitated revenues as a system, certainly that helped to, you know, outside of the insurance help to maintain revenues at a time when everything was going south from the fee for service side. So, definitely have seen that.
1:19:10
So, I know to the extent that, you know, when there is a, you know, a moment to kinda catch your breath, it does feel like this could be, you know, you know, could be the impetus to kinda keep pushing that kind of reimbursement or that payment change forward. So that’s, that’s definitely something that we have seen, you know, the value pace portion. You know, in some markets, it feels like it has paused a little bit in certain places, just because the attention can’t be there, given the current sort of crisis. So we’ll see where that lays out. But I think it’s places look like to Maryland and places like that, where they’ve got a little bit more control on the on the payments schedule that has helped to. So I do think that this kind of, like with that sharp drop that happened in March and April, that this does sort of open your open different eyes to, to sort of advantages and different payment methodologies. So hopefully that’ll, you know, continue to push that forward.
1:20:05
And if I could just add a couple of things there.
1:20:10
Then work and medpac re-examining pride and it, the thought would also apply to the commercial sector and could apply to Medicaid as well.
1:20:24
But, of trying to move primary care too much less of a service by service reimbursement and have something more per patient blocked type of payment.
1:20:38
And, a point I tried to make earlier is there, there is this notion of, like, well, let’s just, you know, put money into the system, kind of get back to where we were. And I really would, you know, counsel against that, you have a lot of churn. You have a lot of change.
1:20:52
You know, you could be also taking our policies that have been out there as, you know, as part of the Congress and beginning to are continuing to.
1:21:04
As I think Suzy was saying, is to push forward with some of the changes.
1:21:10
And that might put primary care both on a more stable, you know, might be a more rational way to pay in general and afford to stable basis for a future, you know, crisis like this, a couple of other things that it just sort of held back and let other people respond on.
1:21:35
Also, um, I think some of the targeting, if it goes to safety net providers, it won’t change the problem that you raised about racial inequities, But also, while it might not know, it won’t solve it. But it could help, could at least not make it worse.
1:21:59
And also, on the same track, we’re thinking about here about how to care for like complex care populations like the dually eligible population in both Medicare and Medicaid, who really did it hit fairly hard by the epidemic from a nursing home perspective and being over represented minorities being over represented. And there’s some issues there with consolidation of care and co-ordination of care between Medicare and Medicaid and responsibility. For providers that might have some, it’s again, this is looking over the horizon as opposed to the immediate crisis that could have something that could help in the future to try and correct some of the inequities.
1:22:50
I’ll stop there, Sarah.
1:22:53
Thank you.
1:22:56
Kind of thinking of looking at the horizon, and we have just a little over five minutes left, so I think this might be kind of, one of my final question.
1:23:05
So I would I ask each of you, What what do you foresee? You know that this crisis portending for provider markets going forward will accelerate the push more to value, you know. What what do you think is actually going to happen as a result?
1:23:26
Once we kind of get through that the immediate, You know, fog of War, if you will, and maybe why don’t we just start in kind of reverse speaking order? So Mark, can I ask you to start off with that? What do you think is gonna happen Over the next few years to provider markets as a result?
1:23:45
Well, I’ll tell you one thing.
1:23:47
I, I was afraid of happening, Particularly when the first kind of waves of, I don’t want to go fast, because I’m segment, where the first wave of health started to roll out, and where it was going. I have written, you know, they had many conversations about it, that we not be accelerating, consolidated markets. There’s tremendous amount of consolidation in the hospital market, both horizontally and vertically, and then increasing consolidation in the physician market. And so the thing I would say is, I’m concerned that that’s happening. And then, when the, the, the help started to go out and its initial directions, I was afraid we were contributing, and pushing that even further down the road.
1:24:43
And I don’t want to take a bunch of time, so I’ll stop here.
1:24:48
OK, thanks, Ken. What do you think is going to happen?
1:24:51
The crystal ball I’m sorry, Toosey was that? You are up there.
1:25:02
I Think, So I think with all of this, obviously isn’t me a lot of I think it’ll be just still that push on.
1:25:12
Know the overall costs in the system and trying to lower that, and of course, you know, continuous quality and all of that, But I think the costs are going to be a big component as we’ve seen just from a reimbursement standpoint, I mean the you know, more and more Medicare more Medicaid. So there’s gonna be a very sort of concerted continued focus on cost using Technology and data to try to lower that cost Is where? I think a lot of? The focus is? Going to be over the next couple of? Years. And I, and I hope that, you know, from what we’ve seen, that, you know, the reimbursement and the payment methods, you know, that we do see the importance of public health care institutions, and better payment models, and that, you know, we can, you know, work to ensure more people. And so, we’re not in that situation where there’s a lot of uninsured and underinsured, but those are the things I hope for. But I think the focus has to be a lot of focus on hospitals, from costs and technology to improve them.
1:26:11
Movie, OK, Now, can you get the IQ?
1:26:16
Hold on a second.
1:26:18
Thanks very much.
1:26:21
So, I think I would quote Jim Collins here at this point, and Jim says, In crisis in extreme crises like these, the separation between organizations tends to be permanent. And those organizations that are start out, we tend to fall further behind.
1:26:42
And I wouldn’t be surprised at all if, if that happens and much to march despair that will lead to further consolidation in the provider market.
1:26:59
Thanks, Ken.
1:27:02
Well, so next we will go to Karen.
1:27:07
Thanks. And I’ll just echo what Kennan marks that are on consolidation.
1:27:09
I think there is a real danger that this could lead to more consolidation, which if we’re not careful, will lead to higher prices. I cannot put out a paper today on the impact of consolidation that reviews past research that shows that.
1:27:26
And of course, those higher prices would lead to higher premiums for people with private coverage.
1:27:35
Thanks, Karen.
1:27:36
All right, and so, Billy, you get the last word, what what trends do you foresee?
1:27:43
Sure, well, I mean, I think that the, the Genie is out of the bottle a bit with, with Telehealth, as with other aspects of society. We don’t quite know where, you know, we’ll re center after kogod passes.
1:27:55
Will people elect, you know, to get their services remotely more often?
1:28:01
Just like you know, are they gonna go back to movie theaters in the same rate they used to before, we don’t we don’t know that, but I think that there will be some of those relaxing the restrictions on telehealth will be maintain that just quickly in NaN.
1:28:14
I’d also add that, um, I think there’s a question about not just the kind of financial health of hospitals going forward, but public and political perception of the financial health of hospitals going forward. What impact will that have on questions about surprise billing?
1:28:31
In Colorado, we had, you know, an effort around a public option that pulled back and part because of sensitivity sensitivity around the hospital finances and the kogod pandemics. So once the dust settles, it’ll be interesting to see if their leverage has increased or decreased due to what we’ve been through.
1:28:49
With this.
1:28:52
Thank you, and, you know, anytime we sort of say future pandemics, I always get a little short of breath because I know we’re we barely gotten through this one. But of course we will also need to be prepared for future disasters as well. Unfortunately.
1:29:09
So with that kind of Debbie Downer comment on, I do want to thank all of you for a really insightful and thorough discussion. We thank our audience for sticking with us and for all the great questions, and encourage you to reach out to us if you have any, any additional issues or topics that you want to see covered. Thank you so much. So, moving forward, you’re gonna get to see a recording of today’s webinar or here recording on our website soon at all health policy dot org and for more pandemic news, please join us tomorrow from noon to one o’clock. Eastern Time, the alliance will be holding a webinar on the immediate and lasting impact in the 19, I’m children. So, we hope to see you there. And finally, please take time to complete the brief evaluation survey that you’ll get immediately after the broadcast and as well as by e-mail. So, Billy, Karen, Suzie and, Mark, thank you so much for joining us this evening.
1:30:08
And we look forward to staying in touch with you all.
1:30:15
OK.
1:30:17
All right, this concludes the webinar. Thanks, everybody.