ProMedica, One Of The Few Hospital Systems That Effectively Handled COVID-19 Revenue Challenges
COVID-19 has infected over 5.79 million people in our country and it has decimated the entire economy. The much needed safety measures that were out in place did help in controlling the spread of the infection, but they also worsened the state of the economy.
Social distancing and quarantine was key to ensure that more people do not die. In order to enforce these measures, the country had to be locked down, meaning no communal activities or spaces were allowed to be open. This forced a lot of business into bankruptcy and closures. The unemployment rate during The Great Depression was around 10.6%, in the initial stages of the pandemic, that is in Feb. 2020, the unemployment rate was at 3.8% and finally in May, when COVID-19 was at its peak, the unemployment rate was around 13%, which is much higher than the time of America’s greatest recession period.
The organizations that could afford a transition switched to a work-from-home model. In the case of healthcare organizations, telemedicine and switching to other forms of virtual care and services was the only way to ensure that their businesses survive the pandemic. However, the losses incurred from shutting down elective procedures was just too much.
For several Health systems, the primary source of income was generated through elective procedures and shutting them down really hurt the financial situation of the system. The losses kept on piling, and in the months when COVID-19 was at its peak, almost everyday, we heard of hospitals and hea;th systems that could not transition or switch to another source get shut down, putting more and more healthcare workers out of jobs.
But despite all these harrowing challenges, ProMedica, a twelve hospital system based in Toledo, Ohio managed to turn out an impressive net income of $234.7 million in the first half of 2020. From their financial documents, it could be inferred that all of this progress can be majorly attributed to the consistent performance of their Paramount division and the CARES relief package of $240 million was of immense help in this endeavour. It just goes to show how important it is for the government to step in and help struggling businesses. It also shows the regrettable decisions the hospital system was forced to make to manage their losses. Here are some key insights into how ProMedica performed during COVID-19:
Key Insights on How ProMedica Did The Seemingly Impossible
- It had a net loss of $22.3 million in the same period in 2019.
- ProMedica’s expenses decreased in the three-month period ended June 30 to $1.5 billion, down from $1.7 billion in the same period in 2019.
- ProMedica saw its net patient service revenue drop 17.7 percent to $986.7 million in the second quarter compared to last year. ProMedica said the patient service revenue decline was related to the suspension of elective care amid the coronavirus pandemic
- In an effort to manage the losses of the losses, the health system was forced to furlough 900 employees, primarily from acute operations that were shut down.
- Overall, the system recorded an operating income of $189.4 million in the second quarter. This compares to an operating loss of $18.1 million in the same quarter last year.
- In the quarter ended June 30, the health system recorded revenue totaling $1.75 billion, up from $1.72 billion recorded in the same quarter last year.
- ProMedica attributed the operating income improvement year over year to the performance of its Paramount division, which provides managed care plans to about 213,000 low-income residents within the state of Ohio.
- Also, ProMedica said provider relief aid from the Coronavirus Aid, Relief, and Economic Security Act helped offset lost patient revenue that resulted from the pandemic. ProMedica said it received $240 million of CARES Act funding in the second quarter.
ProMedica had this to say on how COVID-19 has affected their revenue and overall business, “The COVID-19 pandemic has adversely impacted the system’s revenue and operating results for the three- and six-month period ended June 30. While it is not possible to estimate the length or full financial impact of the pandemic, management expects adverse effects on operations to continue beyond the end of the second quarter.”
As mentioned earlier, times are certainly tough and if businesses do not handle the challenges properly, they will be backed into a corner and forced to make regrettable decisions. The case of how ProMedica managed the seemingly impossible is something we can all learn from and get inspired by. The success of this is not in the fact they managed to turn up a profit, it is that they somehow managed to reduce their losses and stopped themselves from incurring more losses.
Everyone is going through a financially constrained time right now. However, here are the six strategies that BillingParadise has come up with, to help health systems shake off losses caused by the pandemic.
