Pandemic brought $38 million loss for Excela Health, which hopes for more federal aid

Excela Health may have to tap into its reserves to cover $28 million in unreimbursed losses as a result of the coronavirus pandemic this spring that eliminated elective surgeries and patient visits, hospital officials said.

The $38 million in covid-19 losses that piled up between mid-March and the end of May were offset by $10.4 million in CARES Act funding, but Excela and other hospitals across the state do not know if more federal aid will be distributed to the health care systems, CEO John Sphon said Monday at Excela’s annual meeting.

A month ago, Sphon noted Excela’s losses were nearly $36 million.

Excela will not tap into its reserves until it knows whether the state will provide any more financial aid to the hospitals to cover losses from the pandemic, said Thomas Albensi Jr., Excela chief financial officer. Excela does not have to transfer that money by the end of the fiscal year, which is June 30, Albensi said. The hospital system received a $36 million advance from Centers for Medicare & Medicaid Services that does not have to be repaid until August, he said. Excluding the $36 million loan, Excela should have cash and investment reserves of more than $250 million, or five months worth of cash and investments on June 30, Albensi said.

The Westmoreland County-based system is in the same financial position as other hospitals across the state, given a report that projects Pennsylvania hospitals will lose about $4.7 billion between July and December, for a total loss of $10.2 billion for the year. The report, commissioned by The Hospital and Healthsystem Association of Pennsylvania, was based on April interviews of hospital leaders.

Andrew Bilinsky, a spokesman for the Monongahela Valley Hospital in Washington County, said information on its covid-19 losses was not available. Spokespersons for the Uniontown Hospital, Highlands Hospital in Connellsville and Washington Hospital, could not be reached for comment.

Sphon said he is confident in the future of the health system, which operates Westmoreland Hospital in Greensburg, Latrobe Hospital and Frick Hospital in Mt. Pleasant, outpatient centers in North Huntingdon and Unity, and several medical groups. Excela was in the midst of a financial turnaround for the first eight months of the fiscal year, generating a $3 million operating margin through February. A year ago at the annual meeting, Sphon had predicted a return to profitability after two years of multimillion-dollar losses.

Since the return of elective surgeries May 8, the health system has seen a gradual increase in business, Sphon said. He noted there has been a backlog of surgeries.

“I hope it will rebound. We’re seeing that trend,” but there are months to see if the increase in elective surgeries continues, he said.

Excela has not treated any covid-19 patients in about a month, Sphon said.

Since the pandemic started, Excela treated 242 covid-19 patients — 56 of whom were hospitalized, including 10 who died — said Dr. Carol Fox, chief medical officer.

The health system has tested about 6,200 patients at its testing and evaluation center along Frye Farm Road in Unity, with only 2.7% of those being positive. Test results are returned within three days.

If there is a return of the pandemic, Fox said the system will select one facility to treat covid-19 patients. She does not anticipate any vaccine until the spring of 2021.

While other health systems are testing for the presence of covid-19 antibodies, Fox said Excela does not plan to do that. Some tests are finding false positives for covid-19, with tests picking up antibodies that are indicative of a person having a common cold, Fox said.

Even if antibodies are found, that is not an indication of how long the immunity will last, Fox said.

The tests can create “a false sense of security,” she noted. “We’ve not found any testing at this point that is meaningful.”