Rebecca Ryan, assistant vice president, health finance and reimbursement, with the Greater New York Hospital Association, presented the keynote speech at the Foundation for Accounting Education's Health Care Conference on Thursday, saying that a combination of rising expenses and diminishing revenue for hospitals amid the pandemic has meant that the question is no longer whether they will lose money this year but, rather, how much.

Ryan noted that, when the pandemic first hit, hospitals needed to "very quickly" increase their capacities while, at the same time, under orders from the governor, suspend the elective surgeries that brought most of their revenues, such as hip replacements. This meant that at a time when they needed to significantly increase their supplies of items such as ventilators, medication and personal protective equipment, they had even less money to do so, which led to a number of novel solutions among health networks. Ryan talked about hospital networks exchanging supplies, or turning to unconventional sources such as 3D printers.

Ryan also said that there were major staffing challenges, including both managing existing personnel and hiring new staff. In terms of management, she said that almost all hospital staff were reassigned to pandemic work, sometimes causing people to be slotted into roles to which they were unaccustomed; this included more than just medical staff, as Ryan talked about how some hospitals assigned finance teams to serve food. In terms of new staff, she said that there was a heavy need for doctors with highly specialized skill sets who were used to working in intensive care environments; hospitals with such needs often had to turn to staffing agencies, which led to additional recruitment costs.

Compounding issues for hospitals was the petering out of patients with private medical insurance and their replacement with the less-lucrative Medicare and Medicaid patients.

"There was a huge revenue shortfall on elective surgeries especially at the big medical centers that do the more complex procedures,' she said. "The pyramid started changing when commercial went down and more Medicare and Medicaid patients went in, so there's a lot of revenue losses."

She noted, though, that the CARES Act did improve hospital finances a little, particularly through the establishment of the Provider Relief Fund that offset some COVID-19-related expenses and revenue losses.

Ryan noted, however, that the terms have changed several times since the CARES Act. Recent guidance from the Department of Health and Human Services changed the distribution formula to limit how much can be considered a loss.

"Importantly, they changed the terms for revenue loss, provided in the statute, by defining it as a change in net patient care operating income, not of any COVID expenses, so that's particularly challenging for it limits revenue losses for all hospitals," she said.

The guidance balanced this out, however, by holding hospitals harmless to their 2019 bottom line.

"So if you had a negative operating margin in 2019, they'd let you get to a 0 margin in 2020, but if you had 3 percent operating income, a 3 percent margin, in 2019, you can't claim more than that in 2020," she said.

While some hospitals see this as a boon, Ryan said it has been poorly received by certain private hospitals that emphasize cost-cutting measures and write-off expenses without counting them as a revenue loss. Because of this, they will likely receive fewer federal funds.

Another major lifeline to hospitals was the expansion of the already-existing Medicare Advance program to virtually anyone who applied, so long as they were in need due to COVID-19, "which was everybody." The program allows providers to receive a six-month advance on their Medicare payments, which must be paid back in full within a year. But she added that the add-on requires a positive test in the medical record, and the money will be recouped if it's not substantiated, "which for some reasons may not be there, even if the patient clearly has COVID," something she said some hospitals are worried about.

The recent continuing resolution to keep the government funded through the fall, though, did provide some breathing room on this issue. The bill pushed the deadline for Medicare Advance forward by one year, so it won't need to be paid back until 2022, as well as reducing the amount that can be recouped from 100 percent to 25 percent (though this ramps up over 11 months). She also noted that the interest rate, which before had been a very high 10 percent, was reduced to 4—still not as low as many would like but much better than before.

Despite this deadline extension, hospitals remain under severe stress during this pandemic. Ryan did not think any would be doing well this year.

"We expect hospitals to lose money in 2020," she said. "The question is how much."