Lurie Kids’s Hospital has lengthy been acknowledged as among the best pediatric hospitals within the nation, partially due to its laser deal with treating youngsters. However that focus is making it more durable for Lurie, the realm’s dominant pediatric supplier, to climate COVID-19.
Affected person volumes are down sharply as households fearing an infection delay medical care and children spend extra time at dwelling, avoiding most of the childhood illnesses and accidents that may deliver them to Lurie. In contrast to common acute care hospitals, pediatric amenities cannot offset such declines with giant numbers of COVID-19 instances. The virus is not as prevalent in youngsters, and solely a small variety of youngsters that turn into contaminated require hospitalization.
“It is a good factor for pediatric well being care, nevertheless it makes it a problem when it comes to balancing our income and bills,” says Dr. Tom Shanley, Lurie’s CEO.
Whereas no pediatric supplier is proof against COVID’s monetary results, the pandemic has been more durable on Lurie than its high native rivals. At Advocate Aurora Well being’s Advocate Kids’s Hospital and College of Chicago Drugs’s Comer Kids’s Hospital, that are a part of bigger well being care chains, prices are unfold out and enormous numbers of COVID sufferers ease the influence of dwindling pediatric procedures.
COVID struck at a nasty time for Lurie, which added 100 beds and 750 school and workers in a significant enlargement final 12 months. With hospitalizations plunging 15 p.c, the 364-bed hospital has reversed course. Lurie imposed momentary pay cuts and unpaid furloughs, froze hiring and suspended capital tasks.
Shanley will not disclose which tasks are on maintain, however he says Lurie continues to be investing in scientific care and applications for teenagers in underserved areas.
Spending cuts have “considerably” buffered Lurie’s backside line in opposition to COVID, Shanley says. Nonetheless, austerity measures might gradual the Streeterville hospital’s development, giving rivals an opportunity to realize floor.
“There are a number of issues working in opposition to (stand-alone youngsters’s hospitals) if they do not have a community as sturdy because the College of Chicago, as sturdy as Advocate, as sturdy as a number of the different youngsters’s hospitals,” says Brian Sanderson, managing principal of Crowe’s well being care providers group.
Huge, unbiased youngsters’s hospitals—there are about 40 nationwide, together with Lurie—are seeing income declines of round $250,000 a day, in accordance with the Kids’s Hospital Affiliation, which represents greater than 220 youngsters’s hospitals.
Lurie’s income declined $105 million between March and November, in contrast with the identical interval in 2019, says Lurie CFO Ron Blaustein. Working revenue plummeted 97 p.c to $1.7 million within the fiscal 12 months ended Aug. 31 as a result of income shortfall and better prices related to the 2019 enlargement.
In revealing the vulnerability that comes with Lurie’s slender deal with pediatric care, the pandemic might immediate the hospital to hunt a merger associate that may give it entry to the various income streams its native rivals have. Sanderson figures all unbiased youngsters’s hospitals are “contemplating how they will turn into a part of a stronger steadiness sheet community.”
“Lurie Kids’s is dedicated to being an unbiased youngsters’s hospital for the foreseeable future,” spokeswoman Kary McIlwain stated in a press release.
Being half of a giant system has helped prop up Advocate Kids’s throughout the pandemic, says President Mike Farrell.
“There’s one backside line for Advocate Aurora Well being,” Farrell says. “I’ve monetary targets for my enterprise unit, and the particular person operating (Advocate Christ Medical Heart in Oak Garden) has monetary targets for his respective unit. However whereas my labor value could also be going up as a result of I haven’t got the affected person volumes, I am shifting a few of that labor value to him to assist with the volumes he is acquired.”
Kids’s hospitals which might be a part of broader programs even have a monetary cushion within the type of huge pots of CARES Act funding. The federal program geared toward serving to well being care suppliers survive the pandemic largely relied on Medicare funds to allocate the funds early on, bypassing pediatric suppliers that principally deal with Medicaid and commercially insured sufferers.
Lurie acquired round $43 million in federal supplier reduction funds, whereas the College of Chicago Medical Heart acquired about $160 million and 26-hospital Advocate Aurora Well being acquired greater than $315 million.
Even earlier than COVID, youngsters’s hospitals had been coping with most of the identical pressures dealing with the broader well being care trade, together with the necessity to turn into extra environment friendly and rein in medical prices.
Advocate Kids’s, UChicago’s Comer Kids’s and NorthShore College HealthSystem’s pediatric division, which collaborate to advertise entry to specialised providers and higher appeal to youthful sufferers within the space, have labored collectively throughout the pandemic to implement hospital protocols.
In the meantime, in fiscal 12 months 2019, Lurie opened new outpatient amenities to fulfill the rising demand for providers nearer to sufferers’ houses. It additionally added greater than 100 inpatient beds at its Streeterville campus.
Monetary constraints might, for a time, hinder Lurie’s development. As a substitute of opening extra outpatient facilities, it’d look to forge partnerships with hospitals and pediatric practices. It already has greater than a dozen hospital companions, together with Northwestern Drugs’s expansive community.
“Built-in networks, significantly people who put money into expertise, truly present for a greater continuum of look after communities,” Sanderson says. “However when it is monetary hardship-driven, generally these are blended marriages.”
Shanley says the widespread adoption of telehealth throughout the pandemic will assist Lurie, which has superior digital capabilities, higher attain sufferers exterior its present service areas. And because the hospital takes steps to mitigate the monetary influence of COVID-19, it would rely closely on philanthropy—significantly because it prepares to deal with sicker youngsters sooner or later because of delayed care and missed vaccinations.
This story first appeared in our sister publication, Crain’s Chicago Enterprise.