UK Hospital sees drop in COVID-19 patients, but faces $131 million budget shortfall
The University of Kentucky HealthCare system did not get the surge in COVID-19 patients it expected but revenues plunged, creating a significant budget shortfall, a hospital leader said Tuesday.
Dr. Mark Newman, the executive vice president of health affairs, said that there has been “an absolute flattening of the curve” in UK’s coronavirus patient numbers that are unlikely to top 50. The university has to withstand big revenue losses resulting in a possible $131 million shortfall in the hospital’s $558.7 million spending plan for the current fiscal year and next, he said.
The hospital’s shortfall is separate from the university’s projected $73 million budget shortfall.
In March, the hospital system’s revenues were down by about $15 million, and over the following three months, hospital officials project a $160 million loss if the system does not adjust, Newman said during the university’s Board of Trustees meeting on Tuesday. Gov. Andy Beshear announced March 6 that the state had its first coronavirus case.
“We have to move forward while sustaining our readiness,” Newman said. “We will see other surges.”
The hospital’s losses came as the healthcare system had to decrease overall patient volume and shut down elective services, while also spending on expanding hospital capacity and resources for a potential surge of COVID-19 cases, Newman said.
Guided by modeling that was based on the virus’ spread in Wuhan, China, hospital officials were worried they would see a maximum surge of 1,600 COVID-19 patients, plus the hospital’s usual volume of 800 to 900 patients. Underpreparing for the pandemic would have cost lives, Newman said.
“The reality is . . . that we prepared and now we have to transition,” Newman said.
A reimbursement task force has been appointed by the hospital to try to recover lost funds through government payments. The hospital is seeking to get reimbursed by FEMA for building the 400-bed emergency hospital in Nutter Field House which Newman said would be dismantled soon. He did not give an exact date.
The field hospital cost $6.7 million for the rental of the small, temporary medical rooms, negative air system and other costs associated with building the temporary space, a contract provided by the university showed.
Some of the approximately 1,500 hospital workers who were recently furloughed have been able to return to work already as hospital volumes have started to increase in recent days, UK spokesperson Jay Blanton said. He said he did not have exact figures.
To address the potential revenue shortfalls, future construction and capital projects will have to be reviewed, Newman said. Those in need of hospital care — COVID-19 or not — should be reassured that the hospital is safe and is steadily increasing the number of elective surgeries and services back to normal, based on the state’s reopening timeline, he said.
In April, the hospital is projected to lose $50 million in revenue, but as more staff and services are able to come back online, Newman hopes that the system will be able to break even again in July. The system could possibly recover $184 million in revenue through the fall and possibly $180 million in spring 2021 should capacity levels return to near normal. The current fiscal year ends June 30.
“Will we get back to the new normal or old normal in the fall or the spring?” Newman said. “It markedly impacts our ability to make investments and do the things we want to do across all of our missions.”
Newman said the hospital also has to remain poised to handle future surges.
This story was originally published May 5, 2020 at 10:41 AM.