According to news reports, Arizona has emerged as an epicenter of the early summer COVID-19 resurgence. Maricopa County, which includes Phoenix, is currently reporting record numbers of new cases each day. A week ago, on June 22, Arizona reported 2,101 new cases. Yesterday, 3,809 new cases were reported.
A Wednesday brief by COVID trackers at Children’s Hospital of Philadelphia stated that the crisis is “eclipsing the New York City boroughs even on their worst days… Arizona has lost control of the epidemic.”
Here in southwest Colorado, kitty-corner from Arizona, things seem remarkably quiet and under control. Our local hospital in financially secure, for the time being, even though patient revenues are far below last year’s record-setting levels.
Here’s Pagosa Springs Medical Center CEO, Dr. Rhonda Webb, from our interview on June 26, talking about PSMC’s preferred method for handling critical COVID-19 cases: to transfer them to another hospital — one better equipped for intensive care patients.
“Not only are we a small hospital, we’re also a young hospital… we’re young. We’ve grown, since 2008, from basically having an emergency room that wasn’t used very much, and they added lab and x-ray and ultrasound. Then in 2011, they started doing the colonoscopies, and around 2012 they added general surgery. Orthopedic surgery in 2014.
“When you think about how much this has grown over the past 12 years, it’s amazing… Then when we opened the cancer center in 2018, those patients were so grateful that they didn’t have to drive to Durango or Albuquerque.”
The specialist services that have been added since 2008 changed PSMC’s character, and its revenue streams. You can see some of that change in the following graph, presented at last week’s board meeting. The light blue light — 2019 — shows three months with more than $5.7 million in monthly gross revenues.
The financial future looked bright in February of 2020, with a Gross Revenue (the red line) more than $1 million higher than any previous February.
Then… COVID-19 arrived on the scene, and hospitals across the US stopped performing highly profitable elective procedures in order to be prepared for potential virus outbreaks. As a result, PSMC’s April 2020 revenues were less than any recent April.
We might have expected May to be even worse than April, considering the pandemic’s continuation, and a (healthy?) fear of hospitals during such an event. But as we note, the red line — the gross revenue — increased substantially in May, resulting in a near record Net Income for the month — as we can see in the chart below. Only the month of July, 2016 had shown a greater Net Income.
The (surprising?) increase in May — Gross Revenues and Net Income — were the result of an infusion of cash courtesy of the US Government, as money flowed into the hospital bank account thanks to the CARES Act. As I understand it, PSMC brought in more than $3.8 million in federal grants and loans in May.
$3.8 million might seem like a sizable amount of money. But taking another look at the Gross Revenue graph, we see that PSMC revenue for its highest one single month — the month of July, 2019 — was $6.3 million. Almost every month shown on the graph, over the past four years, had exceeded $3.8 million in revenue.
Three years ago, on June 17, 2017, Pagosa Springs Medical Center had held the grand opening for its $12 million Outpatient Wing facility expansion. The press release from then-CEO Brad Cochennet began this way:
We can’t wait to show off this weekend at our Grand Opening events. Every department has been planning a booth for information and festive activities. We will have food, giveaways, games, a helicopter, activities for children and drawings. Both St. Patrick’s Episcopal Church and Pope John Paul II Church are graciously allowing overflow parking.
The building expansion had been eagerly awaited by the growing hospital staff, some of whom were sharing office space in converted storage closets.
The PSMC board decided to build the $12 million Outpatient Wing, as Phase I of a planned $20 million expansion, without asking the taxpayers for a mill levy increase. As a result of that decision, the debt burden for the expansion is paid out of various revenue streams, and has left PSMC with a “Long-term Debt to Net Position” much less favorable than is typical for small rural hospitals in the US.
Here’s a graph from PSMC’s May 2020 audit report.
The position has improved somewhat over the past three years since the opening of the Outpatient Wing. What might happen in 2020, we don’t fully know. So far, PSMC and other medical providers in Archuleta County have not had to deal with a serious outbreak of COVID-19. The number of confirmed cases among county residents has remained at less than 10 since March, with zero fatalities.
But the activity in Pagosa Springs has utterly changed since Colorado began opening businesses at the end of May, and many of the visitors flocking to this quaint rural town for a summer vacation experience are arriving from states currently seeing dramatic increases in confirmed cases.
Dr. Webb discussed what might happen, if Pagosa were to see a large increase in COVID cases requiring medical treatment.
“We have it mapped out; we know what we would do, the issues we would have with supply; what our staff would do; what if our staff gets sick and we have to quarantine.
“So, initially, we sent as many people as we could, to work off-site, in case the people we had on-site got sick, we would have other people to come in from home. And now we’ve slowly brought our people back on-site, because we never got to that surge.”
According to The New York Times database, there have been at least 73,961 cases of coronavirus to date in Arizona. As of this morning, June 29, at least 1,594 people had died of the disease or its complications.
Here in Pagosa, some folks are holding their breath.
“I know a lot of people have opinions about the economy, and hate what’s happened to the economy… but we didn’t get there,” Dr. Webb noted. “And we don’t want to get there.”
“But we’re just as prepared as we can be.”