Conversely, many prosperous health systems emerged unscathed from the moratoriums of last spring, often due to the federal aid. “It gave them an ability to not have to draw down on their reserves to make up for the loss in revenue,” said Suzie Desai, a senior director at S&P Global Ratings.
Systems saw patient visits return to near normal as the year wore on. In some cases, business in the latter half of 2020 was even higher than in the same period in 2019 because of pent-up demand for treatments postponed from the spring, financial records show.
“We saw volumes spring back” in every area except emergency room visits, said Kevin Holloran, a senior director at Fitch Ratings. Major hospital systems also reported that cases tended to be more complex than normal, leading to higher insurance payments.
UPMC accepted $460 million in bailout funds while collecting $2.5 billion more in revenue in 2020 than in 2019. The nonprofit system ended the year with an $836 million operating surplus — providing a 3.6% margin that was triple the prior year’s — in part due to the growth of the health insurance plan the system owns.
Other hospitals that sold insurance, including Baylor, persevered because the cause of their financial troubles — fewer surgeries and doctors’ visits — meant the health plans paid fewer claims.
UPMC’s strong finances went unmentioned in a recent fundraising pitch announcing the launch of its “Health Care Heroes” campaign. “During the past year, health care workers have carried the weight of the world on their shoulders, risking their own health and safety to ensure ours as we navigated the COVID-19 pandemic,” the email said. “Now it’s our turn to recognize their hard work. … By making a donation, you will help provide training, recognition, and support for our staff initiatives.”
Donald Yealy, a senior vice president of UPMC and the chief medical officer of UPMC Health Services, said the fundraising appeal was a way to allow people in the community to show their appreciation.
“The intent of the request and the letter were clear. People are free to ignore or to have an opinion. I don’t begrudge that at all. I respect people having a different opinion," he said.
Hospitals can hold on to unspent relief funds until the end of July to defray any further pandemic-related costs. After that, any unspent money must be returned to the U.S. Treasury. UPMC retains $80 million in unspent relief funds, which the health system said it expects to use. “We’re still in the process of incurring significant costs related to COVID,” said Edward Karlovich, UPMC executive vice president and chief financial officer.
‘A Shot in the Arm’ Sometimes Unneeded