Coronavirus Update: Expert Says Drop In Admissions Straining Bay Area Hospital Budgets

SAN FRANCISCO (CBS SF) -- To prepare for a projected surge in coronavirus patients, San Francisco Bay Area hospitals were told to put other medical procedures on hold. But those patients never appeared and now hospitals are dealing with financial fallout of having so many empty beds.

Glenn Melnick, a well-respected health economics expert at the University of Southern California, has run the numbers. Among his findings, in an average month, California hospitals admit a quarter of a million patients. Since the beginning of the pandemic, Melnick found there's been fewer than 8,000 admissions.

"The good news is they didn't come because the shelter-in-place," Melnick said. "The social distancing slowed the spread fantastically."

But with the dramatic drop in admissions, there is concern.

"We've created tremendous financial stresses and pressures on our health care system," he said.

Melnick said since the shelter-in-place and the necessary pause in elective surgeries, there has been estimated drop of about 40% in hospital revenues. California hospitals have lost billions of dollars.

"Almost half their revenue disappears overnight," noted Melnick.

According to Stanford Health Care President and CEO David Entwistle, his hospitals and clinics saw 30% of its revenue drop. Now, the Stanford Health Care facilities are ready to go back to business. Some top surgeons are ready.

"To be put on the sidelines for a couple of months has really been challenging, " said Dr. Mary Hawn.

Hawn is the Chair of Stanford's Department of Surgery. She told KPIX 5 that Stanford is essentially offering all surgical services with the exemption of cosmetic surgery.

"Spine surgery, joint replacement surgery; we're doing gallbladder removals, hernia repairs, surgeries for less aggressive cancer," Hawn said.

California Hospital Association President and CEO Carmela Coyle told lawmakers in Sacramento that state hospitals have suffered as much as $14 billion in losses by postponing elective surgeries and other procedures.

"We emptied California's hospitals to make way," California Hospital Association President and CEO Carmela Coyle told a budget subcommittee, as most state Assembly members returned to the state Capitol for the first time during the pandemic.

The decision on halting some procedures was "the right thing to do," she said. "But as we begin to access the damage, the toll is enormous."

The request for aid came as California expects to exhaust its record budget reserves and cut programs to pay for its extraordinary response to the pandemic. Gov. Gavin Newsom recently allowed hospitals to again schedule elective surgeries, and witnesses at the hearing said the situation may one day return to normal.

Associations representing doctors, hospitals and advocates said facilities need help in the meantime. California Medical Association chief executive officer Sarah Summer also warned that "the physician workforce is facing an acute crisis."

She said medical practices have lost more than half their revenue, and she predicted that as many as 15% of practices could close their doors, particularly those that are small or in remote areas.

Hospitals have suffered average losses between 20% and 30%, Coyle told the subcommittee on health and human services, with an even higher percentage loss for smaller and rural hospitals.

That equates to as much as $14 billion in losses, she said.

The "bottom line is hospitals are desperate for cash," she said.

© Copyright 2020 CBS Broadcasting Inc. All Rights Reserved. The Associated Press contributed to this report.