New Hampshire Hospitals Impact of COVID-19 New Hampshire Hospital - PowerPoint PPT Presentation

New Hampshire Hospitals Impact of COVID-19 New Hampshire Hospital Association as of June 30, 2020

Hospitals are Economic Engines Hospitals are a leading industry in New Hampshire Largest Industry by Labor Income 3 rd • Behind Wholesale Trade and Government/Education Largest Industry by Total Output * 4 th • Behind Owner-Occupied Dwellings, Wholesale Trade, and Real Estate Largest Industry by Number of Employees 4 th 4th • Behind Government/Education, Real Estate, and Wholesale Trade Source: IMPLAN * Output represents the total value of healthcare industry production as a portion of the state’s gross domestic product. For the service industries, IMPLAN defines Output as Revenues

Strengthening the State’s Economy New Hampshire’s hospitals and health systems are a vital component of the state economy and play an integral role in local business and community development. - 40,451 30,930 71,381 - + Total # of people employed Total # of secondary jobs TOTAL JOBS IMPACT by NH hospitals generated in local economy OF NH HOSPITALS I - - $3.7 Billion $1.7 Billion - $5.4 Billion + Total annual salaries & Additional salaries & benefits TOTAL SALARIES & BENEFITS IMPACT OF benefits at NH hospitals from secondary jobs NH HOSPITALS Source: New Hampshire Hospital Association : Hospital & Health Systems’ 2018 audited financial statements and IMPLAN

Investing in Healthier Communities New Hampshire hospitals provide acute-care services in a traditional hospital setting, but they are also responsible for helping improve the overall health of neighborhoods and communities. Preventive Services ///////// Community Partnerships Education & Preparation of Future Healthcare Professionals Research & Clinical Trials Educational Programs IN COMMUNITY BENEFITS. Meeting the health needs of the uninsured, low-income and other ///////// vulnerable populations. Source: as reported by hospitals in 2017 on their IRS, Schedule H 990’s

Historically Low Operating Margins Even without the financial impact of COVID-19, New Hampshire hospitals have historically operated on small margins. In 2018, the aggregate margin of 1.1% equates to only $61.5M . Acute Care Hospitals State-wide Operating Margins: 2008 - 2018 5.0% 24/26 acute ca re hospita Is represented 4.5% 4.0% 3.5% -~3.0% ... IQ 2 2.4% 2.4% g' 2.5% 2. 3% :.;:; ... IQ 2.1% QI 1 . 9% 8°2.0% 1 .8% 1. 6% Represents 1.5% 1.5% $61.5 Million 1.2% 1. 1% 1.0% 0 . 4% 0.5% 0.0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Hospitals 3 with 7 6 6 8 7 9 11 6 7 11 Negative Margins: Source: New Hampshire Hospital Association : Hospital & Health Systems’ 2018 audited financial statements

Impact of COVID-19 on Hospitals Working with partners at the state, DHHS and DPHS, hospitals have taken the following critical steps to ensure an effective, targeted response to COVID-19: Suspended elective & non-urgent procedures to stand up capacity for a potential surge of COVID-19 .. while ensuring a safe environment for staff, patients and communities Stood up Alternative Care Sites (ACS) around the state to increase bed capacity at hospitals for those .. patients who need more acute care Engaged in employee furloughs, redeployment and layoffs as a result of suspending elective & non- .. urgent procedures .. Invested in Personal Protective Equipment (PPE) and other supplies required to safely treat all patients Set up additional sampling sites and expanded testing capacity across the state These actions, while absolutely the right things to do for patient and staff safety, have created significant financial challenges: By April 11 th hospitals experienced a 51% reduction in utilization (charges) Since March 20 th , hospitals have seen an average of 55% occupancy of inpatient beds (including surge capacity in-house) By May 31 st , hospitals statewide will realize an estimated $445 million in lost revenue These reductions cannot be absorbed by an industry with such small margins, and these losses are simply unsustainable.

COVID-19 Grants Provided to NH Hospitals Amount Distributed to Hospitals Number of Hospitals Impacted CARES Act Funding Notes in NH (Out of 24 Reporting) General Distribution 30B $100.1 Million 24 Round 1 - Part 1 $20B $9.5 Million 13 Based on 2% of 2018 Net Patient Revenue Round 1 - Part 2 "True-up" Payments $2.4 Million 9 Targeted Allocations $10B for COVID-19 Hotspots $0 0 New Hampshire hospitals did not qualify $10B for Rural Hospitals and $112.6 Million 17 Distributed to roughly 4,000 rural healthcare providers nationwide Clinics Rural Distribution "True-up" $207 Thousand 2 Payments Paycheck Protection Program $225M for Rural Health Clinics Funds to support COVID-19 testing efforts and expand access to $641 Thousand 8 COVID-19 Testing testing in rural communities Health Resources and Services Administration $50M - ASPR (Assistant Secretary for $408 Thousand 24 Funds to be spend on PPE Preparedness and Response) NH Emergency Funding - Coronavirus Relief Fund $100M - Healthcare System Relief $35.5 Million 14 Several hospitals applied and waiting for allocation Fund CARES Act $261.3 Million 24 Total Received Out of 24 hospitals reporting

COVID-19 Grants in Context of Hospital Losses Hospital Losses and Grants Received: March – June 2020 Net Variance Gross Variance from Total Expenses Net Operating Revenue Total Grants (Gross Variance from Operations Operations Plus Grants) $2,044,948,947 $1,510,088,446 ($534,860,501) $261,325,739 ($273,534,762) Note: 24 hospitals represented (23/26 acute care and 1 specialty ) • Total Expenses and Net Operating Revenue are actual for March/April, mix of actual and projected for May, and projected for June • Grant dollars are actual to date Hospitals statewide have experienced $538.3M in lost revenue from March to June, and these losses will only continue into the future as we respond and recover from the COVID-19 pandemic. $273.5 $261.3M $534.9M MILLION COVID-19 In Hospital to offset results in in continued deficit Related Revenue for hospitals Losses Grants statewide for March - June Source: New Hampshire Hospital Association, special survey results March – June 2020

■ ■ ■ ~ ~ ~ Projected Hospital Losses through December 2020 Measu re Names Impact of COVID-19: Projection of Cumulative Losses in NH Hospitals To ta I Ex penses Net O perat ing R evenue March 2020 - December 2020 Cu mul a tive N et Op. Rev - Tot al Ex p. $550.6 $543 .9 $550 .0 $550.0 $541.7 $530.9 $5 28 3 $759.4 $524 0 $500.0 $500.0 $486.5 -;;- $50 0.0 -;;;- C $ 489 7 .!! C :E $450.0 $450.0 Million 5 C -=- > " "' "' ::: "' $400.0 $400.0 C C " " .jj "- l! )( w " "- iii 0 ~ ... To prepare and respond $350.0 $350.0 -=: Ma y - Decem ber Co nt ain E st ima ted Values z to COVID-19, hospitals $300.0 $300.0 $307 3 Source: Hospit al fi nancials su bmitte d to New Hampsh ire H ospital Assocat ion statewide suspended 23/26 Acute Care and 1 Specialty Hospital reporting $250 .0 $250 .0 elective & non-urgent $0 .0 procedures, limiting ($ 1 00.0 ) patient services and £' ($200.0) creating a 51% iii ($300.0) decrease in utilization . > " "' .3' ($400.0) ..., " z Resuming these services !: ($ 500.0) .. '.P has begun, however it :i ($600.0) E ::, V will be months before ($ 700.0) hospitals experience ($800.0) pre-COVID operation Mar A pr May Jun Jul Aug Se p O ct Nov De c levels. Source: New Hampshire Hospital Association Analysis of the Financial Impact of COVID-19 on New Hampshire Hospitals

COVID-19: Partnership to Recovery .. Without an infusion of financial resources, hospitals — both large and small — face the risk of running out of operating cash in the next several months. .. The financial consequences for hospitals, our patients, communities and New Hampshire’s health care system are potentially devastating. .. We will need significant financial relief to get through this crisis so that we can be there for our patients and communities. .. Relief from the Federal CARES Act has been helpful, but certainly has not been distributed evenly across the State and will not be enough to address the hundreds of millions of dollars in lost revenue that hospitals in New Hampshire will experience through the end of the calendar year and beyond. .. Hospitals have long partnered with the state, from Medicaid expansion and the Doorways, to community benefits and funding for the Governor’s Commission, just as we did to prepare for and .. respond to the COVID-19 pandemic. We will continue to do so to be there for our patients, communities and citizens of New Hampshire. .. We can get through this together, but we will need help to ensure our community hospitals are able to emerge from this crisis and be there when our patients and communities need us. Partnership to Recovery: We are in this together.