Virus Hospital Prep nvd

Physician assistant Khanh Nguyen talks with a possible coronavirus patient seated in a car at the emergency department entrance to Winchester Medical Center in April.

WINCHESTER — Besides killing some 1.1 million people, including about 222,000 Americans, the coronavirus pandemic has hospitals hemorrhaging money.

Winchester Medical Center lost nearly $49.2 million through Sept. 30 compared to the same time last year. The losses are projected to rise to between $55 million and $58 million by year’s end, according to Mark Nantz, president and CEO of Valley Health System. The losses, primarily from the cancellation of non-emergency surgeries from March 23 to May 6, were part of nearly $78 million lost by Valley Health, the six-hospital chain of which WMC is a part.

Besides fewer surgeries and medical procedures, the losses have come from diminished emergency room and doctor’s office visits, plus fewer visits for occupational and physical therapy. Other costs have been for personal protective equipment and staffing for coronavirus test sites.

Few hospitals have been immune from the financial impact of the virus. U.S. hospitals are projected to lose $323 billion this year, according to the American Hospital Association. That includes $3 billion in Virginia, according to the Virginia Hospital & Healthcare Association (VHHA).

Virginia hospitals are seeking $60 million in federal taxpayer money from the state through the Coronavirus Aid, Relief, and Economic Security (CARES) Act to help recoup their losses. Nantz said on Thursday that Valley Health has directly received $52 million in CARES money and is hoping to get a portion of the $60 million. No decision has been made on who gets what, but the money must be spent by year’s end, according to Julian Walker, VHHA spokesman.

While the losses from the pandemic have been painful, Nantz said they haven’t affected patient care. He said the hospital will continue to be the community’s safety net.

“We have financial reserves to tide us over for a period of time and so this would have to go on for a very long period of time before we would look at significantly cutting any kind of services or access to care,” said Nantz, who took over in June. “We’re not-for-profit. We’re in the business of taking care of people of the Shenandoah Valley and the panhandle of West Virginia.”

At least 260 U.S. hospitals have laid off workers due to the pandemic, according to Becker’s Hospital Review, a health care financial publication, but WMC avoided job cuts. Instead, it started the Paycheck Protection Plan in April. It guarantees that workers who have their hours cut get at least 70% of their salary and benefits. At least 700 workers have been impacted.

In addition, all annual merit raises were canceled. Nantz, who wouldn’t say how much he earns annually, said some of the hospital’s higher paid administrators took time off to save money but are now back at work.

While some capital projects were delayed, the hospital is going forward with construction of a $23 million corporate activities building with work expected to begin in the spring. Peter Gallagher, Valley Health vice president and chief financial officer, said the short-term cost of the building will be offset by the long-term savings from not having to rent facilities around the area.

“It lowers the cost of care in the community,” he said. “That’s the overriding objective.”

Valley Health is maintaining its $600 million rainy day fund, also known as a reserve fund, rather than dipping into it to deal with the losses. Gallagher said it needs to be maintained to keep borrowing costs low for capital projects.

Nantz said the $600 million figure has to be kept in perspective. Valley Health spends $2 million to $3 million per day. The goal is to have the fund cover a year’s worth of costs. It currently covers about 275 days.

While hospitals were losing money due to a lack of patients, those patients still had to pay their health insurance bills. Nantz said the fact that health insurers like Anthem Blue Cross Blue Shield have remained profitable while COVID-19 is infecting hospital finances is something that should be factored into stalled contract negotiations between Anthem and Valley Health.

Anthem accounts for about 20% ($235 million) of Valley Health’s business. In its negotiations with Anthem, which is one of the area’s largest health insurers, Valley Health is demanding higher reimbursements. If a new contract agreement isn’t reached, about 40,000 Anthem customers will be considered “out of network” with Valley Health and subject to higher costs. The existing four-year contract expires in January.

“We’re going to get a fair price from Anthem Blue Cross. They’re our largest commercial payer and we’re not getting paid fairly,” Nantz said. “It’s a pretty neat trick when you can take in revenue and not have to shell out for medical losses.”

Some say the pandemic highlights the ineffectiveness of the nation’s private, for-profit health care system. Millions who received health care through their employer have lost their jobs and hospitals like WMC that rely on a fees-for-service model have sustained substantial losses. Under a government-run plan, WMC would no longer have to rely on fees for services and it would be reimbursed by the government instead of by for-profit insurers like Anthem.

“While the fees-for-service model has problems with it, it has endured for some time,” Nantz said about the issue. “[I support] a value-based system, as opposed to a system where you get paid for doing more stuff.”

Nantz acknowledged with the pandemic predicted to continue for months, challenges remain. With uncertainty about when a coronavirus vaccine will be developed, the Institute for Health Metrics and Evaluation at the University of Washington predicts American virus deaths could increase to nearly 395,000, including nearly 13,000 Virginians, by Feb. 1.

While hopeful that a vaccine is coming soon, Nantz said staff have learned from the pandemic and are prepared for an expected surge. The 495-bed hospital is currently treating about 25 coronavirus patients. Nantz said he’s aware of the stress on personnel who’ve had to balance taking care of their family and patients and he’s grateful for their sacrifices.

“They never cease to amaze me,” he said. “We want the community to know that we’re on good footing. We can take care of whatever happens and we can be relied upon.”

— Contact Evan Goodenow at egoodenow@winchesterstar.com