Not-for-profit Northwell Health in New York is the latest major health system to report a significant operating decline in the first quarter of 2020 from the COVID-19 pandemic.
New Hyde Park, N.Y.-based Northwell weathered a $141 million operating loss in the quarter that ended March 31, a 4.6% loss margin, compared with a $20 million operating loss in the prior-year period, a 0.7% loss margin.
That's partly because Northwell discontinued all non-emergent and elective procedures March 16, earlier than some other parts of the country. New York City has been a COVID-19 epicenter in the U.S., having reported nearly 200,000 cases and about 16,700 confirmed deaths as of Friday afternoon, according to the health department.
Northwell's CEO, Michael Dowling, said in late March the number of COVID-19 patients health system was treating had increased more than tenfold, from 90 to more than 1,250 across the system's 19 metro area hospitals.
But as has been the case nationwide, the real damage hit in April. Northwell estimates its operating results took a $330 million hit in the month of April alone. That was partly mitigated by $1 billion in grants from the Coronavirus Aid, Relief and Economic Security Act and the reopening of certain services. The CARES Act funding is not included in the first quarter results.
Northwell said it expects the negative financial impact to extend beyond April, but the amount will depend on how long the pandemic lasts, the pace of reopening, the amount of federal relief received and the impact of a potential COVID-19 resurgence.
New York state allowed the resumption of some elective procedures in late May in Nassau, Suffolk and Westchester counties, but such procedures were still not allowed in New York City as of May 29, the health system said.
Even though revenue ticked up 4.4% to almost $3.1 billion in the quarter, the increase wasn't enough to offset that of expenses, which jumped 8.5% in the quarter to $3.2 billion. Northwell said responding to COVID-19 required spending more on labor and supplies.
A steep drop in investment value bumped Northwell's deficiency of revenue over expenses to almost $710 million, a massive compared with an excess of revenue over expenses of $201 million in the prior-year period.
Northwell wrote in a report accompanying its financial statement that it began preparing for the onset of COVID-19 in early February. The health system said it was among the first private clinical laboratories approved by the state and federal governments to conduct COVID-19 diagnostic testing. Northwell said it ran mobile test sites and temporary hospital facilities built by the U.S. Army Corps of Engineers at the Javits Center in Manhattan and elsewhere, and is conducting at least six clinical trials for COVID-19 treatments.
"Northwell's team members have put forth a dedicated effort to help its communities, patients and family members battle through the devastating effects of this pandemic," the health system said. "No other health system in NYS has treated as many COVID-19 patients as Northwell and Northwell was among the health systems that treated the most COVID-19 patients in the US."
