As revenues return, doctors worry about potential virus spike impact

Two ChristianaCare nurses talk via iPads in different rooms. Industry experts estimate that collectively Delaware’s hospitals took a $200 million loss during the pandemic,
but finances are starting to stabilize during reopening. | PHOTO COURTESY OF CHRISTIANACARE

WILMINGTON — As Delaware continues to forge on amid the COVID-19 pandemic, hospitals are starting to see revenues stabilize while primary care doctors may face a longer road to financial recovery.

At the pandemic’s early height, hospitals suspended elective procedures resulting in a cumulative $200 million loss. Fewer patients were also seeking necessary care because many were afraid of contracting the virus. Now, Delaware Healthcare Association (DHA) President and CEO Wayne Smith said there might be light at the end of the tunnel as the state has gradually reopened.

“Reopening has allowed needed medical services to once again be performed for patients. There’s signs that hospitals are returning to pre-COVID volumes and revenues,” he told Delaware Business Times. “They’re not there yet, but they’re approaching it.”

With the predicted summer surge of COVID-19 cases in Delaware not materializing and the scheduling of elective, but necessary procedures, however, the financial bleeding has been stopped for now. A loss is still a loss though, and the estimated $200 million collective loss across Delaware’s hospitals most likely overshadows many hospital’s forthcoming decisions as they head to the fourth quarter. 

“The cumulative losses are a continuing worry and hospitals need additional federal and state support to ensure access to care remains at levels necessary to care for our friends and neighbors in Delaware,” Smith said. “Another possible surge worries me, because if you look at the 1919 pandemic, that’s what happened as well. But I’m an optimist about the health care industry in terms of structure for a vaccine.”

Bayhealth has seen a return of patients that need significant hospital care, with occupied inpatient beds around its normal range of 80% to 85% capacity. However, the Dover-based hospital system is still seeing fewer outpatient and emergency departments, Bayhealth Senior Vice President and Chief Medical Officer Gary Siegelman said.

“With a modest increase in hospitalized patients with COVID-19, we could continue to provide many elective surgeries,” Siegelman said in an email. “PresWe have developed an efficient system for testing patients prior to surgery, primarily to protect them. If the number of inpatients with COVID-19 were to approach prior levels, which is very unlikely, we would likely need to temporarily postpone most of our elective surgeries again.”

Siegelman projected that Bayhealth’s financials to be slightly down from normal numbers at this time of year.

The financial hit from COVID-19 also had a ripple effect in the state’s economy. Hospitals and health systems provided nearly $715 million in community spending and spent $3.2 billion on goods and services in Fiscal Year 2018, according to the DHA 2020 Community Benefits Report. Those vendors may be buoyed by non-urgent surgeries as they restart again, Smith said.

For independent doctors, the cost may have been much steeper. Nationwide, it’s estimated that through the end of the year, primary care practices would be expected to lose $67,000 in gross revenue per full-time physician, according to a report by Health Affairs.

A Medical Group Management Association survey showed practices’ revenue was down by 55% leading 48% of them to furlough staff and 22% to lay off staff. That financial blow hit all medicinal practices, but Dr. Joseph Straight, president of the Medical Society of Delaware, acknowledged smaller practices may have a harder to withstanding it.

“Without telemedicine and the [U.S. Small Business Administration’s Paycheck Protection Program’s loans], it could have been a lot worse than it has been,” Straight said. “We’re all struggling right now, but I’m very worried about the single doctors and the primary care practices. They’re already struggling with the low levels of Medicare reimbursement levels right now.”

Nationally, insurance reimbursement for primary care averages between 120% and 140% of Medicare rates. In Delaware, the commercial market reimburses independent primary care at rates as low as between 65% and 85% of Medicare rates.

Dr. Beshara N. Helou pointed to the skewed reimbursement rates as something that accelerates the loss of primary care physicians in Delaware, noting that his small practice in Georgetown could not compete against hefty reimbursement rates for doctors affiliated with hospitals.

“Our overhead is no different than theirs, but it’s more lucrative for physicians to work with a hospital,” Helou said. “We never closed when the pandemic came, but we did have to pull back staffing until we got a PPP loan. Thank God for it, it’s just me and three nurses. We need more physicians.”

What worries Helou is the possibility of a second surge with no return of the expired PPP in sight. He has had to depend on outside funding to help subsidize his revenue stream to his practice, investing money that he would have put into his side home-flipping business.

“We’re prepping for the storm right now. I imagine once we enter the cold and flu season, there will be some panic. Revenues dropped by half in March, and we’re holding steady right now. To take another hit without PPP would be hard,” he said. “We never closed, even though we’re only seeing 10 to 12 patients a day now. We have to stay open for our patients and their health care needs.”

By Katie Tabeling

ktabeling@delawarebusinesstimes.com