Health Care Industry Experiencing Financial Crunch in COVID-19 Crisis

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The COVID-19 outbreak has led to massive lay-offs of workers in a broad swatch of industries. While the healthcare field has been spared from deep job cuts in most previous economic crises, it isn’t immune to the devastating effects of the current one. The unique problems associated with the pandemic have taken a financial toll on medical clinics and hospitals, affecting professionals, as well as support staff. This toll has been so unexpected and dramatic that it’s been compared to an earthquake.

Financial Effects on Health Care Industry

Because a vaccine and effective treatment don’t exist for the virus, social distancing is the only means people have of reducing their risk of contracting the virus that causes COVID-19. This reality has led health authorities to advise the postponement of elective procedures and surgeries. The recommendation not only helps protect the public from the infection, but it also frees staff and resources to devote to individuals with the illness. Although the advisory is critically important for safety, it has removed a major source of revenue from the healthcare industry.

First, the financial effects were seen in doctors’ clinics and dental offices, as people postponed annual checkups and routine screenings: Business in such places has fallen like a rock. Later, hospitals felt the crunch with the cancellations of elective surgeries: Some hospitals expect to lose 50 percent of their income, notes Vox.

Lay-Offs and Pay Cuts from Reduced Health Care Business

According to Altarum, 43,000 health care workers lost their jobs during the first month of the pandemic. The magnitude of this loss is unprecedented in economic crises.

WCPO in Cincinnati provides a snapshot of local lay-offs and pay cuts that are similar to what cities nationwide are experiencing. Doctors who work in Mercy Health, the largest health system in Ohio, are facing 30-percent pay reductions. In addition, First Care Ohio, a medical transport company, has been forced to lay off some employees and cut others’ pay by 10 percent. Moreover, TriHealth, another major health system in the region, has temporarily released employees from their jobs.

Health care providers in Massachusetts are also feeling the pinch, reports NPR. A group of Harvard Medical School doctors has suspended retirement contributions, and Beth-Israel Lahey Health, a primary hospital network in the state, is cutting the pay of executives. Furthermore, a group of OB-GYN doctors who practice in Boston gave their nurses, secretaries and medical assistants two choices: Start collecting unemployment compensation, or move from full-time to part-time employment.

In some parts of the country, even health professionals trained to care for people with COVID-19 have no guarantee of steady employment. Due to the lower revenue coming into some hospitals, they have had no other choice but to lay off some workers.

Efforts to Deal with Economic Consequences

In an effort to bring in more revenue, Mercy Health of Ohio is transitioning from providing patient care via office visits to providing it remotely, which is telemedicine. When possible, they are making available e-visits and video visits.

The telemedicine approach isn’t confined to Ohio: It’s surging across the country. Doctors looking for creative ways to deal with the economic crunch are joining organizations that deliver this mode of treatment.

Aside from finding alternative sources of revenue, such as telemedicine, some health care companies are addressing the lay-offs. One idea has involved redeploying laid-off employees to COVID-19 units.

Along with state and local endeavors, the federal government is helping failing hospitals through the allocation of funds. The first stimulus bill Congress passed designated $100 billion for this purpose. Sadly, despite financial help from the government, some hospitals will likely have to close because they can’t survive without the substantial portion of their revenue that comes from elective surgeries.

The financial crisis stemming from the pandemic seems almost as challenging as the health crisis. Finding solutions to the problem will require multifaceted approaches.

About the author: Mary West is a freelance writer specializing in health matters. Her work has appeared in Livestrong, Olive Oil Times, and other various publications. West love’s medical science and delights in using her writing to inform others about the latest developments in the field.

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