The ferocity of the delta variant surge has delivered a serious financial blow to hospital systems in parts of the country with low vaccination rates that are struggling to care for coronavirus patients, even as they combat plummeting income, reduced bailout funds and higher labor costs.
Many hospitals in Southern states and rural areas of the country - even in states with otherwise high vaccination rates - have been forced once again to temporarily curtail elective procedures such as hip replacements that bring in the most money.
Meanwhile, rates of burnout and nurse attrition have soared at institutions with overburdened ICUs and covid-19 wards, contributing to severe labor shortages that are driving up costs for replacement workers, hospital officials said.
Hospital officials had been hoping a semblance of normalcy would return as vaccines helped beat back the spread of the coronavirus. Instead, with huge swaths of the nation resistant to shots, and delta variant driving a large wave of infection, they got what one administrator called a "triple whammy." Hiring temporary replacement workers drove extraordinary cost increases. Vital revenue from elective surgeries evaporated. And public taxpayer supports to help providers through the crisis last year are drying up.
At Ballad Health, which runs 21 hospitals straddling eastern Tennessee and southwestern Virginia, the senior vice president and chief nursing executive, Lisa Smithgall, said the hospital began the pandemic using fewer than 75 temporary contract nurses to fill holes in its roster of 3,500 acute care nurses. That rose to 150 by August 2020, and to 450 in August 2021.
Contract nurses, who typically work for 13-week stretches, previously made double or triple what permanent staff nurses make, she said. Now Ballad is forced to pay up to seven times as much, as hospitals compete to fill shifts, Smithgall said.
With nurses burning out, staying home to care for family or quitting to become contract nurses themselves, Ballard has no choice but to pay the additional wages. Above all, Smithgall said, front-line clinical workers are exhausted and fed up with a pandemic that could have been stemmed with the advent of vaccines.
"We knew we were at risk in our region because of where we live and because of our vaccination rate being so poor," she said. "At one point, we were seeing four or five nurse resignations per week. They couldn't do it again; they emotionally didn't have it. They were so upset with our community."
On Aug. 26, amid the steepest rise in covid caseloads in the pandemic for the swath of Appalachia covered by Ballad's providers, the system postponed a long list of elective surgeries, which are a crucial source of revenue for hospitals, including: hernia repair, cardiac and interventional radiology procedures, aesthetic and plastic surgeries, podiatric procedures, vasectomies, bariatrics, joint replacements, screening endoscopies and nonessential spine surgery. Ballad said the step was required to preserve space in its hospitals and to conserve staff.
After reaching a peak of 413 covid patients in its hospitals Sept. 7, the system said Sept. 29 the wave had subsided enough to permit a limited number of elective procedures, but only those that did not require an overnight stay.
Smithgall said she does not know what to expect for the rest of 2021, as people move indoors with colder weather and vaccination rates remain stubbornly low. A little over 45% of Tennessee's population has been fully vaccinated against the coronavirus, ranking it near the bottom of states. Ballad said Sept. 29 that the vaccinated population of its service area, the Appalachian Highlands, was even lower, at 42.6 percent.
Compounding the damage for individual institutions: $178 billion in taxpayer supports that were vital to hospitals' survival in 2020 are winding down.
Moody's Investors Service said in an analysis in September that the provider relief funds accounted for 43% of operating cash flow at U.S. nonprofit and government-run hospitals.
But the latest chunk of those provider relief funds, $17 billion released by the Biden administration Sept. 10, must be based on expenses incurred before March 31, 2021 - well before the delta surge spiked in unvaccinated communities and flooded hospitals with new patients.
When Congress passed the bailout money last year, lawmakers focused on the loss of revenue as more-routine surgeries were curtailed and costs skyrocketed for personal protective equipment and supplies for maxed-out ICUs, said Michael Alkire, president and chief executive of Premier, a group purchasing and technology company with over 4,400 hospital and health system clients.
What policymakers did not anticipate, he said, was severe attrition among medical staff and the high costs of finding replacement workers to deal with sequential covid caseload spikes spanning more than 18 months. Many hospitals are taking out lines of credit to get them through the crisis.
"It's going to leave them huge deficits that they are going to have to work out of for years to come," Alkire said.
Based on an analysis of payroll data of 650 hospitals in its client base, Premier estimates that U.S. hospitals combined have been spending at an annualized rate of $24 billion a year over the course of the pandemic to cover excess labor costs, mostly for overtime and costly contract nurses, which rose 63% when comparing October 2019 with July 2021.
In the first half of this year, the sharpest increases in labor costs hit hospitals in the Upper Midwest and across the South, Premier said. Hospitals have spent an additional $3 billion for personal protective equipment, according to Premier.
Health industry executives say the staffing problems have grown much worse in the last two months as delta surged.
"The workforce issue is just dire," said Stacey Hughes, executive vice president of government relations and policy for the American Hospital Association. "The delta variant has wreaked significant havoc on hospitals and health systems."
A recent analysis by consultancy Kaufman Hall for the hospital association predicted a third of hospitals will finish the year with an operating loss, up from a quarter before the pandemic.
Mary Ellen Pratt, chief executive of St. James Parish Hospital in Louisiana, a state that has been among those slammed hardest by the delta surge, said the small facility, with just 25 beds, suffered a 40% drop in revenue in August. She is confronting holes in her nursing schedule because staff members have simply quit, discouraged by grueling conditions.
Her sickest patients cannot be moved to other, more advanced hospitals in Louisiana because all of the institutions in the state are full.
"In the Southern states we don't have a good vaccine rate right now, so the hospitals that are in these zones are getting hit much, much harder than anybody else, and it is very frustrating and it is very difficult," Pratt said. "I didn't have any extra money to incentivize my staff to pick up additional shifts. This is coming out of bottom-line money I don't have."
The financial stresses are not limited to hospitals in the South. Even in blue states with better vaccination rates overall, some hospitals that draw from rural populations returned to a crisis footing.
At St. Charles Health System in Bend, Ore., hospital administrators sent four nurse assistants to alleviate staffing shortages at a nearby nursing homes, so they could move recovering patients there and free up badly needed hospital beds.
The hospital curtailed elective surgeries in August "while we responded to a surge that was significantly greater and much more sudden than the surge in 2020," said Matt Swafford, vice president and chief financial officer of the St. Charles Health System.
Through August, the health system's labor costs shot up 22 percent.
The system was hemorrhaging cash at the rate of $5 million a week during August and September, he added, of which about $1 million was repayment of emergency advances on Medicare reimbursements that the Trump administration distributed in 2020.
"I don't think anybody saw this level of surge coming in 2021 after what we saw in 2020," he said. "We're just not equipped to be able to simultaneously respond to the urgent needs of the community [for more typical surgeries and care] at the same time that a third of our beds are occupied by highly infective covid patients."
Some elective surgeries resumed in the last two weeks after the number of covid patients dipped to 80, from a peak of 100.
"Part of the challenge for projecting out is we don't know how long the surge is going to last," Swafford said. "It's really difficult to gauge where we will end up at year-end."