Processing Your Payment

Please do not leave this page until complete. This can take a few moments.

March 7, 2023

Hospital execs sound alarm on post-pandemic financial strains

PHOTO | New Haven Biz Yale New Haven Hospital
By Liese Klein

The state’s hospitals are bleeding red ink thanks to lingering effects from the COVID-19 pandemic and need help in Hartford to stanch the losses, the Connecticut Hospital Association (CHA) said on Tuesday. 

At an online news conference to mark the release of a report on state hospital finances, CHA President and CEO Jennifer Jackson said that the situation is critical, with results likely to worsen as relief funding dries up.

“The findings show a staggering and lasting impact,” Jackson said of the pandemic and rising costs. “It underscores the financial and operational challenges that threaten Connecticut hospitals… and unfortunately, we don’t see any signs of abatement for many of these challenges in the coming years.”

Industry analyst Kaufman Hall prepared a 20-page report on the aggregate hospital results in Connecticut, finding that even with an infusion of federal relief funds, the state’s hospitals lost a total of $164 million in fiscal 2022. The report looked at hospital operating margins, or profit/loss recorded from patient care and related operations, along with pandemic relief funding. 

Without federal aid, hospital losses would have been close to $1 billion, according to the report.

Yale New Haven Health, the city’s second-largest employer, reported $240 million in operating losses for fiscal 2022 in a recent bond issue filing.

The CHA report blamed the losses on a combination of fewer, sicker patients and increased costs for labor and medical supplies like drugs. The state’s hospitals reported that cumulative expenses were $3.5 billion higher in 2022 than in the year before the pandemic, with ongoing price increases. 

Middlesex Health Chief Financial Officer Susan Martin said that one of the health system’s suppliers recently tripled its prices overnight, adding to a 10% jump in medical-supply costs in the first months of this year compared to the same period in 2022. 

“The medical-supply vendors and pharmaceutical manufacturers – they can and they do pass along all their costs plus their profit margin to us,” Martin said. “However, we have very limited ability to recoup these costs with our reimbursements.”

Although hospitals around the nation have reported lower operating margins in recent reports, Connecticut’s decrease “has been much more dramatic than in other states,” according to the CHA. Connecticut hospitals showed a 67% decline in 2022 margin relative to fiscal 2019, compared to a national median decline of 20%, according to Kaufman Hall. 

Kaufman Hall representative Eric Swanson said that Connecticut performed so poorly in part because of its aging population and its acute labor shortage in healthcare, with thousands of jobs unfilled. 

Dr. Syed A. Hussain, chief clinical officer at Trinity Health of New England, said pandemic-related burnout and retirements have added to the labor shortage afflicting hospitals around the state. Lack of workers in post-acute settings like rehab centers also forces patients to stay in the hospital longer, he added. 

The workforce crisis has forced Trinity to reshape its policies, Hussain said: “How can we implement different models of care, for instance, to supplement our existing staff and prevent burnout to ensure that we always provide high-quality care to our patients?” 

The state’s hospitals have also been squeezed by inadequate Medicare and Medicaid reimbursements, which resulted in more than $2 billion in losses between the two government programs, according to the CHA. Medicaid pays about 68 cents on the dollar and Medicare about 80 cents, according to CHA estimates. 

The hospital association asked that the state legislature provide direct funding to hospitals to help with labor shortages, which have resulted in costly outlays for traveling nurses and other contract staff. The funding would pay for recruitment bonuses, student loan assistance, retention bonuses, tuition assistance and worker training.

Yale New Haven Hospital singled out the cost of traveling nurses in announcing the elimination of 155 jobs in September due to looming losses for fiscal 2022. 

The CHA also asked that state lawmakers block recent efforts to cap commercial reimbursement for hospital services and impose higher nursing staff ratios. Hospitals also object to parts of a recent bill put forward by Gov. Ned Lamont aimed at reducing healthcare costs. 

Hussain of Trinity Health of New England said that the financial strains will negatively impact healthcare in the state over the long term if no action is taken.

“There is no mission without a margin,” Hussain said. “It's really important that financially we are stable to be able to keep our doors open.”

Contact Liese Klein at lklein@newhavenbiz.com.

Sign up for Enews

Most Recent

Most Recent

0 Comments

Order a PDF