Malone’s Alice Hyde Medical Center is ending this fiscal year $1.4 million in the red.

That deficit could’ve been nearly $12 million had the hospital not received $10 million in federal aid earlier this year through the Coronavirus Aid, Relief and Economic Security (CARES) Act, the hospital announced in a news release this week.

Had the hospital shouldered the projected $12 million deficit, the impact would’ve been “devastating,” Alice Hyde Chief Financial Officer Christopher Hickey said Tuesday.

Alice Hyde includes a 76-bed hospital located in Malone, four family health centers, a walk-in clinic, a cancer center, an orthopedic and physical rehabilitation center, a cardiac rehabilitation unit and a dental center. The hospital also operates a nursing home, the Alice Center.

The fiscal year for Adirondack Health, based in Saranac Lake, has not ended yet. Earlier this year, the health network also reported suffering more than $1 million in losses, but the hospital’s year-end numbers have not been released.

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Slim margins

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Many rural hospitals in the North Country operate on razor-thin margins. Even before the coronavirus pandemic, this region saw some health care institutions merging or downsizing.

These hospitals are major employers for the communities they serve — Adirondack Health, for instance, is the largest private employer in the Tri-Lakes area — but they treat far fewer patients than larger metropolitan hospitals, which means less revenue. Local hospitals also serve many low-income and elderly patients, meaning patients they treat often rely on Medicare or Medicaid, which have lower reimbursement rates than private insurance. To add to those financial challenges, rural hospitals often also pay more for supplies because they purchase fewer materials, so they don’t get the same volume discounts as metropolitan hospitals.

The number of financial hurdles for North Country hospitals multiplied with a slate of state Department of Health orders imposed earlier this year requiring hospitals to temporarily halt elective surgeries and the imaging services that go along with them — a significant revenue generator for rural hospitals — while preparing a surge plan to expand intensive care services in the event of an influx of COVID-19 patients.

The state restrictions were designed to curb the spread of the coronavirus while conserving supplies and making room for an anticipated influx of COVID-19 patients, but because of them, North Country hospitals hemorrhaged money for several weeks. Some hospitals were forced to lay off or furlough staff.

The state allowed hospitals in some areas, including Franklin and Essex counties, to resume elective procedures in late April, about a month after the restrictions were imposed. Alice Hyde’s patient volumes began to increase during the summer months, but the revenue generated this summer wasn’t enough to make up for the losses sustained early on in the year.

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Revenue losses

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The number of surgeries performed at Alice Hyde Medical Center plummeted by 35% this year, from 3,051 last year to 1,983 this year, statistics provided by Alice Hyde spokesman Phillip Rau show.

Patient visits declined by more than 5%, and the number of patients discharged from the hospital declined by 24% — from 1,658 last year to 1,250 this year. Emergency department visits declined by more than 14%, and the number of babies delivered at the hospital declined by 15.2%, from 262 last year to 222 this year.

As of Sept. 30, close to end of the hospital’s fiscal year, Alice Hyde recorded $95.3 million in revenue and $96.7 million in operating expenses this year.

Faced with a loss of patient revenue, the hospital has cut expenses, according to Alice Hyde Chief Operating Officer Matt Jones. As of Sept. 30, Alice Hyde’s expenses were about $2.3 million below budget projections for the year. Those expense reductions included temporary employee furloughs and a reduction in leaders’ base pay and benefits. Administrators’ base pay was reduced and contributions to 403(b) retirement plans paused as part of a University of Vermont Health Network-wide response to the pandemic’s financial impacts, according to a news release from the hospital.

Asked how many employees were laid off or furloughed this year, Alice Hyde Associate Vice President of People and Patient Experience Emily Campbell didn’t answer but said no employees are currently furloughed.

“The drop in volumes associated with the COVID-19 pandemic affected dozens of Alice Hyde employees across every department in our organization,” she said. “We worked very hard as a team to make sure the impact to our employees was as small as possible given the circumstances. The majority of furloughed employees returned to their positions within a few weeks, or were placed in alternative assignments to support our COVID response. Currently no Alice Hyde employees are furloughed.”

Furthermore, Jones said, Alice Hyde has added providers to its primary care team as well as specialty providers in general surgery, gastroenterology and urology.

On March 1, Alice Hyde employed 764 employees, according to Rau. As of Nov. 27, the hospital employed 779.

“Ensuring our patients have access to high-quality primary and specialty care close to home is work that never stops,” Jones said. “I’m incredibly proud of what we’ve been able to achieve despite the challenges this pandemic continues to present.”

The challenges posed by the coronavirus pandemic aren’t over, however. The recent rise in COVID-19 cases locally — especially in the northern Franklin County area Alice Hyde serves — is pushing the hospital’s patient volumes down again, according to Hickey.

“We were starting to see the return of volumes to normal levels,” he said. “However, reemergence of COVID-19 has impacted that.”

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CVPH

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Plattsburgh’s Champlain Valley Physicians Hospital, which shares a president with Alice Hyde and also operates under the UVM Health Network umbrella, also announced a significant deficit this year.

President Michelle LeBeau told the Plattsburgh Press-Republican this month that despite receiving $30 million in CARES Act funding, the hospital would still end this fiscal year with a $7 million deficit.

Though the cancellation of elective surgeries were part of that deficit, the hospital had already reported a deficit of $6.3 million in February, according to the Press-Republican, which reported that the hospital was also contending with reduced Medicaid rates, the implementation of a new billing system, reduced patient volumes, traveling nurse and physician costs, and increased overtime expenses.