Massachusetts safety-net hospitals on life support over high coronavirus costs

Independent regional hospitals that bore the brunt of the state’s coronavirus pandemic are on financial life support, buckling under the high costs of caring for COVID patients and insufficient state and federal aid.

“It’s created an unsustainable and untenable situation for us,” Lawrence General Hospital President and CEO Deborah Wilson said. “We could be looking at needing to reduce or eliminate services this fall.”

The hospital found itself $13.1 million in the red last year as it cared for patients in the epicenter of the state’s outbreak despite receiving roughly $60 million in state and federal aid. Lawrence was considered a high-risk community for nearly the entirety of the 15-month outbreak.

Lawrence General is facing a $20 million deficit this year as access to relief dollars has dried up. The hospital made the first of painful cuts to come last week, slicing $6 million in staffing costs, primarily from the non-clinical areas. But Wilson warned cuts would go deeper without more aid to bail out community hospitals like hers.

Unlike the state’s cash-flush corporate hospital systems Mass General Brigham and Beth Israel Deaconess, community hospitals “have long operated on razor-thin margins,” Massachusetts Hospital Association President and CEO Steve Walsh said, noting COVID-19 has pushed them to the brink.

“Now, after a year of sparing no cost to remain open and accessible to their communities, they are in need of support more than ever,” Walsh said.

Kim Hollon, president and CEO of Signature Healthcare, said the pandemic has had a “significant” effect on the finances of Brockton Hospital, which serves another of the state’s hardest-hit communities. Without aid, the hospital would have lost $46 million in revenue, he said.

The state’s 28 safety-net hospitals and community health centers serve a disproportionate percentage of low-income patients and their reliance on Medicaid reimbursements which are typically less than traditional commercial insurance payouts. That has compounded their financial burden.

During a recent debate on the Senate floor, state Sen. Barry Finegold pointed to chest X-ray procedures to illustrate the imbalance. Insurers reimburse for chest X-rays at a rate of $180 for Mass. General Hospital, but just $100 at Lawrence General Hospital, Finegold said.

“This is a manifestation of systemic racism in the insurance industry,” Finegold said, calling on the state to direct a portion of the $5.3 billion in federal American Rescue Plan Funds heading to the state to bail out community hospitals. Gov. Charlie Baker’s administration said it is “continuing to review and analyze” the plan.

The state has boosted aid to the tune of hundreds of millions, particularly to safety-net hospitals teetering on the brink amid the pandemic, but executives say it’s still not enough to fill the gaps.

Dr. George Kondylis, chief medical officer at Lawrence General said, “after the devastating impact of COVID in Lawrence, the only greater hardship our community could face would be not having all of our services here to serve the region.”

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