Beebe weathering budget hits; prepping for Biden presidency

November 27, 2020

With more than 2,700 employees and an annual operating budget in the $450 million range, Beebe Healthcare is a major economic driver in Sussex County as well as a major provider of healthcare.

When the coronavirus forced Beebe to shut down non-emergency surgeries and testing procedures in March, Beebe’s typical revenues took a serious hit. Had it not been for $21.1 million in federal relief money related to COVID-19, and $2.1 million in community donations specifically designated for COVID relief, Beebe would have ended its 2020 fiscal year, which closed June 30, with total expenses outpacing the year’s revenues by just about $23 million.

“In March, April and May we saw in-patient and emergency department volumes drop by 10 percent, compared to the same three months in the previous year,” said Beebe Chief Financial Officer Paul Pernice in a recent interview. “Our walk-in clinic volume dropped another 16 percent. In addition to $12 million in COVID-19-related expenses, the decrease in volumes and our decision to maintain total staffing without furloughs or layoffs – to meet the surge – we would have been in the red,” said Pernice. “But with those relief funds, we ended the fiscal year in June with a positive $65,000 operating margin.

“That’s a slight margin, but I’m satisfied given the circumstances. I think we’ve weathered the storm well. Now our biggest challenge is getting our patient volumes back up.”

Pernice said financial ratings agency Standard and Poor's reviewed Beebe and continued its BBB rating. “I was pleasantly surprised they affirmed our rating with a continued stable outlook. That speaks volumes of their confidence in Beebe and what we’re doing for the community. They said other healthcare systems are being downgraded and that a continuation of the rating should be considered an upgrade. We’re making our bond payments which finance all of our expansions. We are financially sound.”

Pernice said Beebe reopened for non-emergency surgeries and testing in June. “They’re starting to come back but still running behind last year.” The biggest concern is walk-in clinic volumes for the first quarter of this year – July, August and September – which are down 42 percent from the previous year. He also noted that inpatient volumes were already trending downward, since many former inpatient procedures have shifted to outpatient procedures.

Chief Executive Officer Dr. David Tam emphasized that Beebe’s walk-in clinics are being safely operated, and he encourages people not to wait if they have medical concerns. “We don’t want people to put off concerns that should be addressed sooner as opposed to later, such as possible heart attacks or strokes.”

Tam said Beebe’s finances have also been boosted by the COVID-related Medicare Accelerated Advance Program. “They gave us a $71 million advance on anticipated Medicare work to help with the COVID pressure. That means when we do Medicare work, we are able to immediately reimburse ourselves out of those funds. We are focused on growing our business to expand our financial stability, and increase services through the recruitment of sorely needed physicians in areas such as internal medicine, primary care and cancer treatment. We’re getting lots of interest – maybe because some physicians are leaving cities because of COVID. Interest is coming from all over the country, including a couple from Johns Hopkins.”

Prepared for Biden presidency

Tam said Beebe may have to do increased preparation for a Joe Biden presidency and occasional visits by him to his summer home in North Shores.

He said he dealt directly with being prepared for presidential visits when he was commanding officer for the Naval Medical Center in San Diego, Calif., during the George W. Bush administration. “President Bush cared a lot about wounded warriors, and I ran the wounded warriors unit there. He loved taking time with those soldiers.”

Tam said Beebe will be monitoring the local situation carefully. “We had a plan in place with Biden as vice president. We may have to do more for him as president, but we will be ready.”


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