Happy Easter to everyone. I sincerely apologize for posting this on a joyous religious holiday. I do so because we are out of time to dispassionately examine and act on the ramifications of the onerous COVID-19 lockdown.
Here’s a big one. On Thursday, Fitch Ratings placed fifteen hospitals and healthcare systems around the country on a Negative Rating Watch explicitly because of COVID-19. Alarmingly, Rhode Island holds not one but two spots on this short list: Lifespan and Care New England.
The Rating Watch reflects those ratings with the greatest risk of transition under the current coronavirus pandemic as reimbursement and overall expenses are expected to be significantly disrupted over the short term. The margin pressure is primarily due to the loss of revenue from elective medical and surgical volumes, resulting in weaker operating EBITDA levels through the first half of calendar 2020 and negatively impacting full year results.
Five Rhode Island hospitals, Bradley, Hasbro Children’s, Kent, Newport and Woman and Infants, are within the Lifespan and Care New England systems.
But just because Fitch has not downgraded other hospitals or healthcare systems in Rhode Island does not mean they are not also under very serious financial pressure. Hospitals in Rhode Island and around the country are encountering acute cashflow issues because they have been forced to cancel most surgeries and procedures due to the extreme and unprecedented COVID-19 lockdown ordered by many states. Hospitals and healthcare systems simply cannot operate in a revenue vacuum.
The biggest objective of the very onerous COVID-19 shutdown was to preserve the healthcare system by not overwhelming it. But the original dire forecast of COVID deaths and hospitalizations has not panned out, as Justin noted already four days ago. In fact, deaths and hospitalizations were remarkably overestimated. So, correspondingly, our hospitals have not been stressed because of COVID-19.
Paradoxically now, the lockdown itself, not the disease, has turned out to be the biggest threat to hospitals and healthcare systems.
A couple of months ago, no one knew the magnitude of the threat posed by COVID-19 so our officials took drastic action in the absence of information. But now we have a lot of information and the news is very good, indeed. The original models were very wrong. Even as we approach the peak of the disease, projected mortalities have dropped stunningly from 2.2M to 60,000. The disease has turned out to be far less of a threat than we feared. So the original extreme measure of a lockdown is no longer warranted.
Now we need to act urgently on this new information, both good and bad. With the exception of a couple of hotspots, the lockdown needs to end around the country. Very soon. Like in the next week. Absolutely not next month. With safety measures at work and in public places and some self-quarantining of more susceptible populations, yes. But as quickly and precipitously as our elected officials acted to implement the lockdown, they need to end it. The imminent danger to our hospitals and healthcare system is at the top, but by no means the only, item on the list of urgent reasons to do so.