Winter saw chilly demand for health care

Harsh winter weather and a mild flu season took a frosty bite out of financial results at some of Minnesota's largest operators of hospitals and clinics in the first three months of the year.

Health sys­tems say a quiet season for respiratory illnesses depressed the volume of patients receiving hospital care dur­ing the first quarter compared with last year. Out­pa­tient and elec­tive vis­its took a hit, as well, with the arctic plunge in late January and the snows of Feb­rua­ry resulting in missed appointments and closed clinics.

"It was an unusual first quarter," said Ric Magnuson, the chief financial officer at Minneapolis-based Allina Health System. "The fact that there was the weather, the fact there was a light flu season and then the third part — that traditionally this is our weakest or lightest quarter from a volume perspective — you put all those together and that's what caused the erosion in our financial performance."

Hospital officials say the financial hit from the unusual combination of factors won't be long lasting. But the figures show how seasonal factors can nudge the numbers in health care, particularly during the first quarter when patients are more likely to delay care if possible because health insurance deductibles typically reset on Jan. 1.

While the mild flu season and tough weather were noteworthy, hospital officials say a wide variety of factors contribute to financial results in any given quarter. They also stressed that the lack of respiratory illnesses this winter was good news.

"That's obviously very positive from a public health standpoint," said Hayes Batson, the chief financial officer at Fairview Health System.

The most recent flu season saw 2,531 hospitalizations connected with the viral illness, down from 6,446 admissions the previous year, according to the Minnesota Department of Health.

During the last week of January, Minnesota endured the coldest air temperatures seen in more than 20 years, including a low of 28 degrees below zero at one point in the Twin Cities. The National Weather Service said February 2019 was the fourth-snowiest February recorded in the Twin Cities.

In a financial statement, Minneapolis-based Fairview cited a 2% decline in inpatient admissions and 3% decline in outpatient registrations, attributing them in part to "lower infectious disease cases" and "severe winter weather affecting patient access and patients deferring services." Weather along with competitive pressures contributed to a 5% decline in total surgeries, according to the financial statement.

"We don't have hard data to support weather's contribution to the low volumes in the quarter, but we have anecdotal information from across the organization and in talking with other health care providers," Fairview said in a written response to questions.

Officials with Children's Minnesota said they were expecting revenue growth during the first quarter, but the final tally of about $238 million was basically flat compared with the year-ago period.

One reason: The surge of patients with respiratory illnesses that is typical in winter months didn't materialize.

The seasonal increase usually means more than 300 patients per day in the hospital, compared with averages closer to 275 patients during nonsurge periods, said Trevor Sawallish, the chief operating officer at Children's. In February and March this year, however, volumes hovered near the nonsurge average, he said, with some daily totals as low as 245 or 250 patients.

With outpatient care, Children's saw more cancellations and no-shows than usual, Sawallish said. Weather blocking patients had a much smaller financial effect than the mild flu season, he said, but the cold and snow might have indirectly slowed the spread of respiratory illness.

"If people are sick and staying at home," Sawallish said, "they aren't sharing illnesses as much as they otherwise might."

Mayo Clinic said in a financial statement that its regional network of clinics and hospitals outside Rochester saw first-quarter revenue grow 3% "despite significant weather-related volume disruptions in the first quarter." Whereas Fairview reported a quarterly loss and Children's saw less income, Mayo reported an increase in first-quarter earnings.

In the east metro, Entira Family Clinics closed its evening urgent-care centers early on two occasions "because the weather was so bad that patients weren't coming," said Len Kaiser, the chief administrative officer. Some of the delayed demand seems to simply push into March, Kaiser added.

During the last week of January, Allina notched 34 instances of early clinic closures. Heat loss, plumbing breaks, electrical outages, among other events, also forced 12 weather-related closures at various Allina facilities. The health system operates 11 hospitals, including Abbott Northwestern, Minneapolis, and United in St. Paul along with more than 90 clinics that span the Twin Cities metro and beyond.

The snows of February were particularly disruptive because they often fell during the week, rather than the weekend, said Magnuson, the Allina chief financial officer. That matters because a lot of health care happens Monday through Friday.

"There's a little bit of a ripple effect, because when they're not coming in to see the physician or their doctor, it also then impacts any downstream business that they may need," Magnuson said.

For the first quarter, Allina posted an operating loss of $17.2 million on about $1 billion of revenue. Inpatient admissions at Allina were down 3% during the first quarter, the health system said in a financial statement, while outpatient surgeries were down 2%

"Results in the first quarter of fiscal 2019 were quite modest," said Fitch Ratings in a report that cited the flu, snow and "the polar vortex" as factors. The report added: "Management expects volumes and operating margins to rebound through the rest of the year."