Minnesota hospitals, other providers have rebounded after patients hesitated early in pandemic

·4 min read

Jun. 19—WILLMAR, Minn. — Minnesota's hospitals have rebounded in the past year as patients who had stayed away because of the coronavirus pandemic returned. Though some likely still face financial struggles in the future, federal relief aid and alliances formed before the pandemic appear to have helped them survive.

A year ago, the state's health care providers were focusing on the pandemic and caring for patients with COVID-19.

On a separate track, they were prepared to provide the usual range of health care services, too, but many patients were staying away, some from fear of the coronavirus.

"For the most part, we all know more about COVID than we did a year ago," and hospitals in the state are now operating close to pre-pandemic levels, said Carnie Allex, president of Carris Health-Redwood Hospital. Carris Health operates hospitals, clinics and other facilities at 14 locations in Redwood Falls, Willmar and New London.

Early on, nonemergency surgeries were postponed in an effort to preserve scarce masks, gloves and gowns. Patients' return was gradual after surgeries were allowed to begin again in May 2020.

Hospital activity around the state returned more fully in the third quarter of 2020, according to Dr. Rahul Koranne, president and CEO of the Minnesota Hospital Association.

"Things have rebounded very nicely," Allex said recently. Clinic appointments and hospital admissions are nearly back to normal, judging by 2019 activity levels, she said.

Staff members who had been furloughed early on are back at work with normal schedules. Visitor restrictions are still in place but not as strict.

To be sure, the pandemic is not over. The Minnesota Department of Health continues to report new cases and deaths each day, though at much lower levels than a year ago with the aid of vaccines.

Hospitalizations continue, as well. On June 13, the state reported 98 people in hospitals and 49 people in ICUs with COVID-19.

While hospital activity is nearly pre-pandemic levels, recovery from the upheaval of the pandemic could prove difficult for some providers.


"One critical thing that the pandemic did teach us is how critically important it was to have a local hospital." — Dr. Rahul Koranne


Hospital operating margins have been declining in recent years, Koranne said, and the pandemic caused the numbers to worsen.

The median operating margin for Minnesota hospitals was 1.7% in 2018 and 1.4% in 2019, Koranne said. More than a third had negative operating margins.

"That signals a significant fragility," he said. "That does not mean a hospital is going to close." Hospitals also have non-operating revenue, and the association works with state and federal lawmakers on ways to improve hospital finances, he added.

A recent issue has been providing adequate reimbursement for telehealth and telephone visits that have grown in importance during the pandemic.

Federal pandemic relief aid helped many hospitals stay above water during the worst of the pandemic, Koranne said. Because of the many types of aid available, it could be some time before the full impact is known.

Allex said federal aid "helped us avoid large layoffs like some other health systems."

The pandemic aid caused some headaches for the finance department, she said, as the money came from different pieces of legislation and with different guidelines. Sometimes the rules changed midstream.

A Hospital Association survey last year indicated a negative 2% operating margin in the first quarter and negative 5% in the second quarter of 2020, Koranne said.

In the third quarter, health care providers worked to get the word out that they were open for business, and their margins came back up.

"However, we are seeing sicker patients because of all that deferred care," he said.

"One critical thing that the pandemic did teach us is how critically important it was to have a local hospital," Koranne said.

Patients "had the comfort of knowing they could go to the emergency room, be admitted locally and stay close to family," he said.

In cases where local care wasn't possible, Koranne said he was proud of the way the state's hospitals responded.

Koranne said he wanted the public to know how admirably the state's hospitals worked together as a network at the height of the pandemic. "Even at maximum peak, for 100% of Minnesotans who needed a hospital-level of care, we were able to find a bed for them," he said.

Kelly Asche, research associate for the Center for Rural Policy and Development, said his research of rural health care providers has found that especially rural hospitals fall below the typical margin of 4%.

Rural hospitals are among those likely to have negative operating margins, too. They lack a large patient volume and a population that is older, sicker and less well-insured in general, he said. At the same time, they have fixed costs and need costly equipment.

Something that many rural residents haven't liked — the mergers of smaller providers into larger regional networks — may have helped their local hospitals or clinics survive the past year, Asche said.

"This trend of mergers and acquisitions is actually helping sustain health care in our most rural regions," he said.

Smaller providers can take advantage of the economy of scale offered by larger systems and gain access to improved technology, he added.

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