Becker's Hospital Review

9 CFO / FINANCE Kaiser returns $500M in CARES Act payments By Ayla Ellison K aiser Permanente reported a $1.1 bil- lion net loss in the first quarter, but the Oakland, Calif.-based health sys- tem's finances are expected to bounce back, Chair and CEO Greg Adams told the San Francisco Business Times in early June. Like other health systems across the U.S., Kaiser experienced a drop in revenue af- ter suspending elective procedures to save supplies and capacity for COVID-19 pa- tients. Despite the financial damage from the pandemic, Kaiser ended the first quar- ter of this year with operating income of $1.3 billion, down from $1.5 billion a year earlier. The health system's $1.1 billion net loss in the first quarter was primari- ly driven by investment losses totaling $2.4 billion. ough Kaiser took a hit in the first quarter, it is not in a dire financial situation. "We looked at our financial plan and we will be off budget for the year, but we will do fine," Mr. Adams told the San Francisco Business Times. Kaiser, a nonprofit system, has returned more than $500 million in grants it received through the Coronavirus Aid, Relief and Economic Security Act, Mr. Adams told the San Francisco Business Times. e funds are meant to cover lost revenue and increased ex- penses tied to the COVID-19 pandemic. e one exception was the $11.8 million Kaiser received for Maui Health in Wailuku, Hawaii. Mr. Adams, who has served as CEO since December 2019, said one of the system's top priorities is planning for the next surge of COVID-19 patients. "Hospitals are working now, as we speak, to really think through with the state and de- sign a plan for how we will respond to the next surge. And we certainly expect there to be a surge," Mr. Adams told the San Francisco Business Times in June. "We can't reduce or close the hospitals or the healthcare system to the degree that we did this time." n COVID-19 to cost hospitals $323 billion, American Hospital Association says By Morgan Haefner H ospitals will lose $323.1 billion this year because of the COVID-19 pandemic, ac- cording to a report from the American Hospital Association. The total includes $120.5 billion in financial loss- es the association predicts hospitals will see from July through December on top of $202.6 bil- lion in losses they estimated between March and June. The losses are in large part due to lower patient volumes. "While potentially catastrophic, these projected losses still may underrepresent the full financial losses hospitals will face in 2020, as the analysis does not account for currently increasing case rates in certain states, or potential subsequent surges of the pandemic occurring later this year," the AHA said in June. Hospitals and health systems are reporting an av- erage decline of 19.5 percent in inpatient volume and 34.5 percent in outpatient volume when com- pared to baseline levels from last year. Most hos- pitals don't expect to return to last year's levels in 2020. n Mayo Clinic restores pay, ends furloughs months early By Alia Paavola M ayo Clinic restored pay to pre-COVID-19 levels for staff and called back furloughed workers months sooner than anticipated. The Rochester, Minn.-based system in April furloughed or cut pay of 30,000 staff members to help offset billions of dollars in losses attributed to the COVID-19 pandemic. Mayo Clinic said June 24 it would restore pay for all staff except senior leadership in mid-July and bring back furloughed workers by August. Mayo said it was able to end the pay cuts and furloughs early due to a better-than-expected increase of activity in practice, research and education. Mayo also said patient volume for outpatient, pro- cedural and surgical services is rising. "Because of our staff's teamwork and commitment to patients, our practice reactivation over the past eight weeks has truly exceed- ed expectations for revised 2020 patient volumes and financial targets," said Gianrico Farrugia, MD, president and CEO of Mayo Clinic, in late June. "In short, we are in a much better position than we anticipated, and we're very pleased to be able to restore pay and end furloughs early." Dr. Farrugia also said that while furloughed staff will return by the end of August, many people will work from home. n

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