While fighting the pandemic, Sonoma County hospitals’ finances are crippled by it

Dione Darra of Santa Rosa Sports & Family Medicine has seen patient visits decline by more than half at the specialty and primary care medical office.

Even though many patients can be taken care of remotely through telemedicine, they are putting off appointments, said Darra, who handles financial management for the North Dutton Avenue practice.

“People are sheltering in place, but they’re fearful of going out anywhere. They feel we’re too busy and that their problems are minor,” said Darra, whose husband Dr. Ty Affleck is medical director and sports physician.

“I’ve had to decrease staffing 40% to 50%,” she said, because of steeply declining revenue.

The Santa Rosa sports and family medicine practice is not alone in its economic pain. Many local hospitals, clinics, affiliated medical groups and solo practitioners are on the front lines of the community battle against COVID-19, the disease caused by the new coronavirus. Ironically, the key weapon keeping area hospitals from getting overrun by virus patients - the countywide stay-home order that halted most businesses and requires residents to stay at least 6 feet from each outside their homes - is simultaneously crippling the health care sector.

Hospitals had to cancel money-making elective surgeries and outpatient procedures, while ramping up inpatient and intensive-care services in preparation for the potential surge of coronavirus patients. Meanwhile, medical groups, independent physicians and community clinics have seen patient visits dwindle and revenue fall.

Santa Rosa Community Health, the county’s largest system of health centers, projects a loss of $3 million from March to June. Healdsburg District Hospital, which has been forced to furlough 38 of its 387 health care workers, lost nearly $2 million in March.

In some cases, the straggering losses at health care institutions are being partially offset by federal grants, early payments for care and business loans, but the county public health emergency shut-down that began March 18 and lasts at least through May 3 threatens to destabilize the local health care industry when it’s most needed to ensure that the community fights through the coronavirus pandemic.

Statewide, more than half of the hospitals are expected to report net losses before the pandemic is over, said Jan Emerson-Shea, a spokeswoman for the California Hospital Association.

“We do know, however, that there will be long-term financial devastation to California’s health care system as a result of the pandemic,” Emerson-Shea said.

Smaller district and rural hospitals, which often struggle to make money more than big health care systems like Sutter Health, Kaiser Permanente or St. Joseph Health, are the most vulnerable.

On Thursday, during a virtual meeting of the North Sonoma County Healthcare District board, Healdsburg hospital officials disclosed a dire picture of the virus-related financial bleeding.

Richard Baland, the hospital’s interim chief financial officer, said total losses for March are expected to be $1.74 million. That’s a far greater amount than the $464,700 monthly loss hospital officials had budgeted.

A number of the hospital’s clinics, which normally operate in the red, are losing more money than expected. Normally Healdsburg hospital revenues from surgeries would offset those losses, but outpatient revenue is down by 65%, he said.

For example, Baland said the Women’s Center, which lost about $10,000 a month in 2019, is projected to lose $20,000 in April. Similarly, the hospital’s wound care program, which he said lost $40,000 a month last year, is expected to lose $180,000 in April.

“What’s different now is the money that the hospital had before to manage or offset these losses - we don’t have it,” Baland said. “Yes, we had the losses before, but our ability to sustain them is different now.”

At Sonoma Valley Hospital, another small district medical center, officials declined to reveal the mounting financial effects of the COVID-19 outbreak. The hospital also refused to say whether they have had to furlough or lay off employees.

The big local hospitals, and there are three, have more resources to shoulder the financial devastation but all hospitals are feeling it, said Dr. Rajesh Ranadive, president of the Sonoma County Medical Association.

“All of this is ... going to put a strain on hospitals, especially the smaller hospitals, which were already in financial distress prior to COVID,” he said.

Ranadive, an internal medicine specialist with St. Joseph Medical Group in Petaluma, said the local medical association is working with the state medical association to lobby state and federal legislators for small business loans and other resources to help small practice physicians.

Ranadive said it is essential to get doctors the financial help they need before they are forced to close their practices.

“In Sonoma County, it’s not easy to recruit physicians,” he said. “Once we lose them, it becomes that much more difficult to recruit them to this area.”

Officials at Sutter Health, one of the state’s largest hospital systems, said they’ve had to cancel elective procedures but patient care has shifted in some areas. They have not laid off any employees across more than 30 surgery centers and over 20 hospitals, including at Sutter Santa Rosa Regional Hospital. Sutter Health, instead, is reassigning certain employees across its state network.

“This is one way we are moving staff around the system to meet a potential surge of patients,” Ashley Boarman, a Sutter Health spokeswoman, said in an email.

Boarman said 60% of the nurses who volunteered for redeployment have been retrained to support key areas like medical-surgical and intensive care units.

Sutter Health officials said physicians and advanced practice clinicians also have been retrained to support patient video visits for primary care needs. Staff members that can’t be redeployed but are willing to work are eligible for up to 80 hours of disaster pay.

Boarman said the nation’s federal disaster declaration due to the pandemic allows the company to tap its philanthropic disaster relief fund established in 2017 in response to devastating California wildfires. Sutter Health reported $12 billion in annual revenue in 2017.

St. Joseph Health, which runs Santa Rosa Memorial and Petaluma Valley hospitals, also has seen a notable drop in patient volume due to cancellation of elective surgeries as the hospitals prepare for a potential spike of coronavirus patients.

Christian Hill, a St. Joseph Health spokesman, said services that have been scaled back include diagnostic imaging, and laboratory and therapy services. These services, he said, are now only provided to patients whose health would be otherwise endangered.

Because of the financial peril at Santa Rosa Community Health, Naomi Fuchs, the organization’s CEO, said she had to furlough five people from her staff of 50.

Fuchs said the network of clinics recently received grants of $1.3 million and $87,000 spread over many months. That will help, she said, but it won’t cover all of the losses.

You can reach Staff Writer Martin Espinoza at 707-521-5213 or martin.espinoza@pressdemocrat.com. On Twitter @pressreno.