Banner expects $1B in revenue losses this year

Lower patient volumes and the cost of bringing in additional staff to treat COVID-19 patients is putting financial strain on Phoenix-based Banner Health, according to a report by the American Hospital Association.

Like health systems across the U.S., Banner Health saw a steep decline in patient volume in March and April due to the shelter-in-place order. Banner suspended elective procedures and nonemergent care from mid-March to May 1. During that time, inpatient volume declined 30 percent and outpatient volume dropped between 40 percent and 60 percent, Banner CFO Dennis Laraway told the association. 

Though the health system has received about $300 million under the Coronavirus Aid, Relief and Economic Security Act to help offset revenue losses and higher expenses tied to the pandemic, Mr. Laraway said more assistance is needed. Exclusive of the CARES Act funding, the health system is projecting about $1 billion in revenue losses in fiscal year 2020 and operating losses of $500 million as compared to initial budget expectations, according to the report. 

The projections for this year do not include higher labor expenses associated with bringing in more than 750 nurses and respiratory therapists to treat COVID-19 patients. The health system plans to bring in more staffing to handle a backlog of nonemergency services. 

Mr. Laraway is calling on Congress to provide additional funding for hospitals treating large numbers of COVID-19 patients. 

“We’re afraid the CARES Act money will run dry, and states like Arizona, Florida and Texas might be left with a really big hole in our healthcare systems,” Mr. Laraway told the association. “While many of these systems are strong, vibrant enterprises, they also serve as the safety net in many communities. As we’re taking a beating from the pandemic, enduring economic losses and having to curtail routine services, it’s going to put a lot of stress on healthcare systems to be that safety net for our communities.”

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