Edward-Elmhurst Health, parent company of Naperville’s Edward Hospital, has taken a big financial hit from the coronavirus pandemic, with income down 40% and unbudgeted millions being spent on things like personal protective equipment, officials say.
The revenue drop is tied to a halt in elective procedures, surgeries and visits to doctors’ offices and the closure of the their fitness centers, Edward-Elmhurst Health CEO Mary Lou Mastro said.
“We have already begun to change some of the ways we do things to offset those reductions in revenue,” Mastro said.
Hospital officials discussed the situation during a “town hall” meeting Wednesday, accessible to community leaders by video conference. Edward-Elmhurst is also the parent company of Elmhurst Hospital in Elmhurst, Linden Oaks Behavioral Health in Naperville and numerous health care clinics, immediate care centers and medical offices in the area.
Denise Chamberlain, executive vice president/chief financial officer for Edward-Elmhurst Health, said the nonprofit company has incurred unexpected expenses because of the pandemic, which first started to emerge in Illinois in January.
In addition to having to buy huge quantities of protective gear for both employees and patients, they’ve opened a drive-up COVID-19 testing site at the system’s corporate center in Warrenville and put up temporary tents outside both hospitals to handle overflow patients.
There also have been unplanned employee overtime, additional building security, and services the hospital will need to write off for people without insurance, officials said.
While Chamberlain declined to say exactly how much the expenses have added up to so far, just the purchase of personal protection equipment, known as PPE, is in the millions, she said.
“We have a lot of expenses we wouldn’t normally have,” she said.
Because of the drop in elective surgeries as a result of the virus outbreak, the two hospitals are operating at only about 60% bed capacity. Typically, Edward would have 300 or more of their 364 beds — about 82% — occupied by admitted patients, officials have said.
Last year Edward-Elmhurst’s operating income was about $55 million, according to public documents filed by the health care system. It’s not clear if Edward-Elmhurst is facing a budget deficit for the current fiscal year because of the revenue losses and unplanned expenses.
Chamberlain said they’re making changes to address the financial situation, delaying the purchase of new equipment and computers and shifting employees to different jobs to reduce overtime costs. Many have been redeployed to providing patient transportation and helping with the intense cleaning that needs to done to protect patients and staff, she said.
Edward-Elmhurst officials are hopeful money from the federal stimulus package will help them recover some of their coronavirus-related expenses, Mastro said.
“We anticipate we will get money from the federal government as well as (the Federal Emergency Management Agency),” Mastro said. “And we are applying for any and all grants and monies that we will be able to recoup some of our losses.”
The Coronavirus Aid, Relief, and Economic Security Act or the Federal Emergency Management Agency should pay for many of the costs associated with the overflow tents and drive-up testing site and includes a provision that may allow health systems to be reimbursed for canceled elective surgeries, Chamberlain said.
As a nonprofit, Edward-Elmhurst treats anyone in need of care, regardless of their ability to pay, Chamberlain said. They should be able to bill the government for COVID-19 patients, although it’s not clear if they will be reimbursed for all the services provided or just the costs related to in-patient care, she said.
Edward-Elmhurst has about $1 billion in reserve funds and investments, public documents show, enough to cover more than 250 days of operation without any revenue coming in during an absolute crisis, she said.
As a result, the overall financial health of the system remains solid despite the current situation, Chamberlain said.
“We are financially strong. We are going to be fine on the other side of this,” she said.
However, because many of the hospitals’ costs are fixed and don’t change regardless of how many patients they have, the loss of income and increase in expenditures will need to be addressed, Chamberlain said.
“There’s a lot of things we have to do and, and costs we incur that don’t have anything to do with volumes,” she said. “We don’t have the ability to flex down when revenue drops.”
At this point, pay cuts, furloughs and/or layoffs are not on the table, but it’s something they revisit every week, Chamberlain said. “We continue to look and see,” she said.
On Thursday, Gov. J.B. Pritzker extended the state’s stay-at-home order through the end of May but adjusted some provisions so some elective procedures and surgeries can resume. That’s good news not just for the hospitals but for those who have been waiting for months to health problems addressed, Chamberlain said.
Patients should have no qualms about coming to the hospital, she added. The system in place ensures COVID-19 patients are completely separate from the rest of the hospital population and employees are equipped with the protective equipment that will keep all patients safe, she said.
