After more than a month of no elective surgeries, Florida hospitals are beginning to feel the financial effects.
Henry Grady, managing director in health care investment banking for Truist in Atlanta, said many hospitals have seen patient volume decline 30% to 50%, and some are laying off and furloughing workers to cut costs. Grady works with several health systems in Northeast Florida.
“These electives are really the bread-and-butter, day-to-day activity of the hospital or health system,” Grady said. “Those are the types of patients that are helpful in maintaining profitability and bottom-line stability of the hospitals. So you have really taken that out from underneath them.”
UF Health CEO Leon Haley said April 16 hospital admissions are down 14%, operating room visits are down 60% and clinic patient visits are down 65%.
Mayo Clinic announced April 11 it would impose salary cuts and furloughs after April 28 in response to “unprecedented challenges.”
With help from an advance Medicare payment, which was part of the Coronavirus Aid, Relief and Economic Security Act, Haley said the hospital would be set financially through June. Grady said those have helped systems better weather financial losses.
Grady expects hospitals to recover quickly, but doesn’t see patients rushing back for elective procedures.
“I think there will be a fairly significant initial push to catch up and to keep up. Everybody is going to be probably a little bit leery on their own schedule as to how comfortable they are getting back into the hospital, and getting back into the mainstream,” Grady said. “I think the systems are ready to handle the increased volume, and I think they will welcome the increased volume.”
In his role at Truist, he has been speaking with hospitals more often to see which of their clients are in more dire situations and need help. That could be through a loan, refinancing and restructuring.
With interest rates down, more institutions are coming to him to refinance. Some hospitals are looking for loans rather than liquidating endowed funds with markets that are “a little bit depressed and a little bit volatile.”
Grady said he has not seen any health systems pull back from construction or expansion projects, but said they could move at a slower pace in the short term.
Because of changes to the certificate of need laws, health systems no longer need permission from the state to build hospitals, and Grady said he expects health systems to try to capitalize.
Ascension St. Vincent’s announced March 24 it plans to build a hospital in northern St. Johns County. Baptist Health purchased a $5.65 million parcel in Silverleaf in St. Johns on March 23.
“I still see them trying to accelerate, still trying to move forward with their vision and grow,” Grady said. “I think it all depends on the economy and when we can all get back together again and get focused on building and creating and starting things new.”