When it comes to keeping Wilmington Health afloat, every option is on the table.
CEO Jeff James said he might eventually need to sell the North Carolina multispecialty practice’s properties and lease them back. Worst-case scenario: He might eventually need to sell the practice.
“We plan on surviving this,” he said. “We just don’t know what it’s going to look like on the other side. We’re going to keep our doors open as long as we possibly can.”
Once they stopped performing elective procedures in mid-March, providers of all types and sizes liken their revenue trajectory to a car going off a cliff. The damage came swiftly, and even their best cost-cutting efforts and billions in government aid weren’t enough to stop the bleeding.
“It’s really stunning and remarkable how quickly the revenue flow dissipated over the course of just several days, frankly,” said Tim Weir, CEO of Olmsted Medical Center, a one-hospital system in Rochester, Minn., that anticipates a $25 million revenue decline over the months of April, May and June.
The sharp revenue decline coupled with the higher costs of labor, supplies and treatment for COVID-19 patients will culminate in hospitals losing a collective $202.6 billion from March 1 to June 30, according to an estimate from the American Hospital Association.
Revenue was more than halved for 40% of health systems that responded to an American Medical Group Association survey conducted in mid-April. Another 55% of respondents had less than six months cash on hand. More than 80% of systems had furloughed employees and three-quarters had cut physician salaries.
Among independent medical groups, like Wilmington Health, things are even more dire. Almost half told the AMGA they’d lost more than half of their monthly revenue in the first quarter, and almost all had cut physician pay. Sixty percent said their cash reserves will run out within two months.
Wilmington Health, North Carolina’s largest multi- specialty physician group, saw revenue drop 53% from the outbreak's onset through mid-April, James said. At that time, the practice had about eight weeks of reserves.
Grant funds that Wilmington Health received from the CARES Act worked out to about $12,000 per physician, which James said doesn’t even come close to covering the cost of overhead.
“Twelve thousand dollars per doctor is literally nothing,” he said.