Hospitals Had Huge Financial Losses From Lost Revenues During COVID-19 Pandemic
Postponement of nonessential surgical procedures early in the coronavirus pandemic not only disrupted surgical care at U.S. hospitals, but also took away a large portion of hospitals’ total income, results from two studies reveal. These findings (from the two studies, which took place at the University of Pennsylvania, Philadelphia, and Children’s Hospital of Philadelphia) were presented at the virtual American College of Surgeons (ACS) Clinical Congress 2021.
Surgical services are typically an important financial engine for hospitals, and the new study findings showed that curtailing surgical procedures for even two months can seriously impact a hospital’s financial security. Most elective, nonurgent operations in the country stopped from mid-March to early May 2020, to conserve resources for patients with coronavirus disease 2019 (COVID-19). Results of one study found that this two-month suspension cost a single university health care system 42 percent of its net revenue for five months.
Nationwide, hospitals lost $1.53 billion from missed elective pediatric procedures alone, the other study investigators estimated as part of their study, for approximately the same period, March to May 2020. Hospitals were slow to make up the surgical backlog and the lost income from children’s operations, with a median, or middle, time to recovery of one year, the investigators estimated.
As COVID-19 cases reportedly continue to remain high in many states, some hospitals are again triaging cases and delaying selected operations.1,2 Consequently, the researchers said their findings demonstrate the need for better long-term planning by hospitals to prevent further shutdowns to ensure patients have access to the surgical services that they need.
Reasons for not delaying surgical care
“Whenever possible, we should not delay surgical care for our patients,” said the first study’s lead investigator, Daniel M. Mazzaferro, MD, MBA, a plastic surgery resident at the Perelman School of Medicine at the University of Pennsylvania. “Surgery is a critical asset to the survivability of a health care system.”
Moreover, delays in surgical care also can lead to patients’ medical conditions worsening, affecting their quality of life, or sometimes even shortening it. Another result is patients may require more treatments, raising health care costs down the line, Dr. Mazzaferro noted.
The pandemic resulted in an unprecedented temporary postponement of many elective operations across the country, as recommended by the American College of Surgeons (ACS) and other organizations in March 2020 to free hospital beds and other resources for COVID-19 patients.3 The ACS provided guidance for how hospitals could triage surgical cases—that is, select which operations to prioritize and which to defer until after COVID-19 caseloads decreased.4
Dr. Mazzaferro and his coworkers calculated the net revenues of three hospitals in their health care system during the first surge, or “wave,” of COVID-19 cases from March to July 2020, compared with the same period in 2019. A total of more than $99 million of net revenue was lost from all surgical departments and $58 million from the department of surgery in the first wave. The researchers reported a median net revenue loss of $636,952 per month per division for the department of surgery in the first wave, using updated data presented during the virtual Clinical Congress. However, the system lost significantly less money—$274,626 each month for each division—during a second COVID wave between October 1, 2020, and February 29, 2021.
The surgical department did not suspend elective operations during the second surge, said Liza Wu, MD, FACS, senior investigator of this study and professor of surgery at the Perelman School of Medicine.
“We were in a better position than the first time around to continue with elective surgery,” Dr. Wu said. “We had more personal protective equipment or PPE, better COVID-19 therapies, and a better understanding of the virus, and we probably were able to get COVID patients out of the hospital faster.”
Their surgical department, she added, also began triaging elective surgical patients using a new scoring system called the Medically Necessary, Time-sensitive Scoring, or MeNTS, which University of Chicago physicians described in the Journal of the American College of Surgeons.5
After elective operations resumed in June 2020, surgeons quickly regained their productivity, Dr. Mazzaferro reported. He made this conclusion based on a measure of surgeon productivity that insurance payers use for reimbursement, called work relative value units (RVUs). Work RVUs decreased significantly less in the second COVID-19 wave than the first: 7.8 versus 13.2 percent.
For the second study, researchers led by Sourav Bose, MD, MBA, MSc, then a postdoctoral research fellow at Children’s Hospital of Philadelphia, assessed the financial impact of COVID-related pediatric procedural cancellations. To project lost surgical revenues, they used the 2016 Kids’ Inpatient Database, which represents approximately 80 percent of pediatric hospital admissions nationally.
Dr. Bose, a general surgery resident at Brigham and Women’s Hospital in Boston, said the nation’s children’s hospitals delayed or canceled an estimated more than 51,000 elective procedures from March to May 2020.
“Our message isn’t all about revenue. It’s about how to efficiently manage surgical patients’ needs,” Dr. Bose said. “Hospital systems must assess their operations management strategies to optimize the availability of surgical resources for patients with the greatest need.”
He proposed that hospitals optimize any excess resource capacity that existed before the pandemic or increase their capacity for performing procedures based on their resources, such as expanding hours for operations.
Dr. Mazzaferro also recommended that health care systems make long-term preparations so they can safely provide elective surgical care during future peaks in COVID-19 caseloads. He suggested the following:
- Increase hospital bed and resource capacity through alternate solutions, such as sending an overflow of surgical patients to other patient care units or facilities that can accommodate them.
- Appropriately triage elective operations following ACS guidelines4 and other published surgical triage tools.
- Ensure sufficient PPE for health care workers and patients.
- Help keep staff healthy by mandating COVID-19 vaccines or frequently testing them against the virus.
1 Advisory Board. Hospitals Are Delaying Elective Surgeries Again. But This Time, They’re Doing It Differently. Daily Briefing. https://www.advisory.com/daily-briefing/2021/08/18/elective-surgeries. August 18, 2021. Accessed September 29, 2021.
2 Paavola A. 106 Hospitals Postponing Elective Procedures Amid the COVID-19 Resurgence. Beckers Hosp Rev. June 1, 2021. Accessed September 29, 2021.
3 American College of Surgeons. COVID-19: Recommendations for Management of Elective Surgical Procedures. https://www.facs.org/covid-19/clinical-guidance/elective-surgery. March 13, 2020. Accessed September 20, 2021.
4 American College of Surgeons. COVID-19: Guidance for Triage of Non-emergent Surgical Procedures. https://www.facs.org/about-acs/covid-19/information-for-surgeons/triage. March 17, 2020. Accessed September 20, 2021.
5 Prachand VN, Milner R, Angelos P, et al. Medically Necessary, Time-Sensitive Procedures: Scoring System to Ethically and Efficiently Manage Resource Scarcity and Provider Risk During the COVID-19 Pandemic. J Coll Am Surg. 2020;231(2):281-288.