Hospitals paid a high price for preparing for coronavirus : Planet Money Hospitals lost millions of dollars preparing for a surge of COVID-19 patients. Some were swamped, but others only saw a handful of coronavirus cases. Now many are struggling to survive.
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Waiting For A Surge

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Waiting For A Surge

Waiting For A Surge

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UNIDENTIFIED PERSON #1: NPR.

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STACEY VANEK SMITH, HOST:

About a month ago, we spoke with Dr. Patrick Cawley. He heads up the Medical University of South Carolina Health. MUSC is a teaching hospital headquartered in Charleston. It has over 17,000 doctors, nurses and other health care workers, and hospitals throughout the state. When we talked with him last month, he had just laid off 900 people.

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VANEK SMITH: I mean, 900 people is a lot. That's a lot of layoffs. What was it like to make that decision?

PATRICK CAWLEY: Well, I would say it was - I would say it was the hardest decision I've ever had to make in my entire career. And I've had some tough decisions I've had to make over the years as chief medical officer and CEO. But I would put this right up there as the hardest one.

VANEK SMITH: But Patrick says he didn't really have a choice. To prepare for the coronavirus pandemic, the hospital had to shut down the parts of its business that make the most money, the elective surgeries - like hip and knee replacements - and the procedures - like colonoscopies. At the same time, the hospital had to invest in preparing for COVID-19. It got more hospital beds set up, bought gowns and masks and other equipment. And that got expensive. But Patrick had to get the hospital ready for a surge of coronavirus patients, which he was expecting to hit in late April.

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CAWLEY: Pat Cawley.

VANEK SMITH: Hey, Dr. Cawley. This is Stacey from NPR.

CAWLEY: Hey, Stacey. How are you?

VANEK SMITH: This is THE INDICATOR FROM PLANET MONEY. I'm Stacey Vanek Smith. The hospital business - hospitals seem like one of the few places that would be seeing a lot of demand right now, and yet many are struggling, losing millions of dollars and laying off staff.

VANEK SMITH: Today on the show, we check in with Dr. Patrick Cawley at MUSC about coronavirus in South Carolina and what the bottom line is looking like for his hospital a month later.

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VANEK SMITH: It can be a little bit weird to think of hospitals as a business with, like, quarterly earnings and profits and a bottom line.

LEN NICHOLS: Well, a lot of people don't, but, you know, if you're an economist, we've been thinking about them that way for quite a while (laughter).

VANEK SMITH: Len Nichols is a health economist at George Mason University. He says hospitals typically have pretty thin margins, less than 10%. And he says hospitals, especially public hospitals, lose money on a lot of the essential services they offer. And they make it up with elective surgeries.

NICHOLS: They have to basically rob Peter to pay Paul, and that's how they've survived. So if you take away the elective surgery from the privately insured, you've taken away the margin - period.

VANEK SMITH: Dr. Patrick Cawley says MUSC's medical center went from making a few million dollars in profit every month to losing a lot of money.

CAWLEY: In March, we lost $20 million. In April, we've lost a little more than $30 million. We have received some federal dollars, but we don't anticipate seeing any more federal dollars at this point. And I'm going to venture a guess that May will probably be in the 15 to $20 million loss range.

VANEK SMITH: At the same time that all of these losses were occurring, economist Len Nichols says hospitals also needed to prepare for the unknown, for the coronavirus pandemic. They had to invest enormous amounts of money in masks and gowns and ventilators and into expanding their emergency facilities.

NICHOLS: They shut down in anticipation of a wave like Italy was going through and New York went through. And who knew? It could happen anywhere, right? So they all prepared for the worst, and that created this cascade of revenue loss.

VANEK SMITH: And in a lot of cases, the worst - the surge of patients - never actually came.

CAWLEY: We did not get a big surge of patients, at least in our Charleston hospital.

VANEK SMITH: How many COVID patients did you see at the peak?

CAWLEY: I would say, at our worst, we probably had a dozen patients.

VANEK SMITH: That's not very many.

CAWLEY: No.

VANEK SMITH: So it sounds like you did not see much of a surge. And I know you invested, like, a lot of time and money preparing for this. Do you wish you had not done that?

CAWLEY: Based on the data we had at that time, I don't think there's any way we could have done it any differently. It would have been almost reckless to not have done that preparation because, you know, people - large numbers of people would have died if we were not prepared. So my hope is next time that we have better data.

VANEK SMITH: So now, Dr. Patrick Cawley wants to get the hospitals back in business. Patrick has opened elective surgeries back up. He's put a bunch of safety protocols in place. And he's opened the hospital back up for business.

CAWLEY: That is coming back very, very slowly.

VANEK SMITH: Patrick says people just don't seem to want to come to the hospital right now.

CAWLEY: I think it is - a lot has to do with the patients' perception of their own safety. Everything's down - heart attacks coming into our emergency room, stroke patients coming into our emergency room. Everything is down.

VANEK SMITH: Chemo patients aren't coming in for treatment. Parents aren't bringing their kids in for vaccinations. Cancer screenings aren't happening. Patrick is worried that people staying away from the hospital is not just hurting business, it's causing a big public health problem. So he decided to take action.

CAWLEY: So we spent the last several weeks preparing marketing material that we are a safe place. And that's never anything we've ever had to do before.

VANEK SMITH: As part of this, Patrick and his team are airing ads to convince people that it's safe to come back to the hospital. There's also a whole online campaign featuring patient testimonials and doctors reassuring people that it is safe to come in for a visit.

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UNIDENTIFIED PERSON #2: We'd say we're open and ready to take care of you.

UNIDENTIFIED PATIENT: I was - recently had surgery here at MUSC. The experience was a little bit scary in the beginning.

UNIDENTIFIED DOCTOR #1: We set up a system where we are testing all of our patients preoperatively.

UNIDENTIFIED DOCTOR #2: My staff and I are ready to address your foot concerns, so please call us. We'll be happy to schedule appointment. And when you come to my office, we ask that you wear a mask. I'll be wearing mine.

VANEK SMITH: And, Patrick says, it's starting to work.

CAWLEY: In the last week or two, I'm starting to see a path through all this. Surgeons and our procedure positions started to book cases, and the patients actually started to come. So when I saw the first week of that happening, you know, I started to feel that we can get past this.

VANEK SMITH: Patrick says they're back to about 80% of their normal business. And he's hoping he'll eventually be able to hire back the people he let go, although he says business might not come back to some parts of the hospital at all.

CAWLEY: There's like in our emergency rooms, our emergency rooms are still only seeing about 50 to 60% of what they saw before. People are not coming in the emergency rooms. And so, you know, maybe the - maybe the emergency room business is going to be smaller for us in the future. And maybe I don't need as many staff. But I really don't know that at this point.

VANEK SMITH: In any case, Patrick says, he can't act too quickly because there's always a chance the surge will come. Maybe a second wave of COVID-19 will hit Charleston much harder than the first. And above everything else, he has to be ready for that.

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VANEK SMITH: This episode of THE INDICATOR was produced by Camille Petersen, fact-checked by Brittany Cronin. THE INDICATOR is edited by Paddy Hirsch and is a production of NPR.

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