Hospitals Across California Hit Hard Financially Post-Coronavirus Peak

Millions spent to prepare for coronavirus surge that never happened.

Nearly three months after California declared a state of emergency and tasked hospitals to prepare for large numbers of coronavirus patients, the majority of hospitals across the state have found themselves in dire financial straits due to preparing for a New York City surge level of cases that never came.

California hospitals have lost $14 billion since March

Between March and May, hospitals invested heavily in purchasing extra protective equipment, invested in extra ventilators and field hospitals, and cleared normal rooms for extra ICU rooms. However, low levels of coronavirus patients were recorded in most hospitals, with some hospitals getting even lower numbers due to the state temporarily reopening several closed hospitals. Income also fell by 50% due to hospitals stopping most non-emergency procedures during this time. Combined, this has cost California hospitals around $14 billion in revenue.

“It was the perfect storm to wreck these hospitals,” said Dr. Andrew Wang, who helped with the budgets of two hospitals. “We were wrong for the right reasons. We simply over prepared. Lockdown measures worked better than expected and people generally followed health and wellness rules like social distancing. It was better to have prepared for the worst instead of underpreparing, which could have led to many more deaths.”

“The downside is that hospitals largely paid the price, and now they’re hurting.”

“One hospital I helped with didn’t use any of the extra 50 or so ICU rooms they set up. They had unused ventilators. Sheets were being changed on unused beds.”

“We overprepared. That’s what happened.”

Health care workers themselves felt the brunt of this as, according to the California Hospital Association, thousands have been laid off by hospitals.

The highly touted Health Corps, which was set up by Governor Newsom shortly after the pandemic struck, had expected to bring on tens of thousands of health care staff to help out with the expected spring surge. 25,000 signed up in less than a day, with 95,000 health care skilled people in total applying. However, to date, only around 800 have been hired by California

Now, reeling from the twin financial blows, hospitals are struggling to get ready for a possible new surge in cases this autumn, and wrestling with the question of whether they over-prepared last time around.

Expecting to need thousands of doctors, nurses and other workers to fight the pandemic, California in March called for a “Health Corps” to care for patients, with 95,000 people signing up.

Hospitals besieged by coronavirus costs, layoffs

The overall amounts lost, both in money and in personnel, have been staggering. In Dr. Wang’s two unnamed hospitals in Southern California, they have lost $9 million and $18 million respectively, with both releasing doctors, nurses and other workers. Palomar Health in San Diego lost $12 million so far, a number which would have been $20 million if not for 300 layoffs. The large Loma Linda System in San Bernardino County has lost $160 million in total, with around 1,000 layoffs.

Employees who were retained have been made into ‘jack-of-all-trades‘ to make up for the number of positions lost.

“Before I was laid off earlier this month, I had to start doing things I was never really trained for and had to learn on the spot,” said Maria, an unemployed nurse in San Mateo County. “Everyone is stretched thin. It’s strange. There’s so much need despite not having many cases here. And that’s because of how much these hospitals have lost.”

With around 50% of hospitals either losing money or breaking even before the coronavirus hit, the now majority of hospitals in the red are looking for a sort of bailout. Hospitals have asked the state for $1 billion in emergency funding for immediate need and $3 billion more in the 2020-2021 budget. The Senate budget proposal partially addresses this with increased health care spending, as does the federal CARES Act which has given some emergency funding to hospitals.

However, with budget dates quickly approaching and hospitals still losing millions a day, many are hoping for quick action to stave off even more layoffs and reduced services, especially with a possible coronavirus resurgence being projected later this year.

“There’s no easy way out,” added Dr. Wang. “We can’t cut too much more. We need state help to stay afloat because of all of these coronavirus costs.”