PPP loans keep hospitals, clinics financially stable

By: - August 9, 2020 6:58 am
Payment Protection Program loans kept health care facilities across Kansas operating through the pandemic (University of Kansas School of Medicine-Wichita Medical Practice Association)

Payment Protection Program loans kept health care facilities across Kansas operating through the pandemic (University of Kansas School of Medicine-Wichita Medical Practice Association)

TOPEKA Hospitals and clinics in Kansas, which were struggling to pay employees and stay above water financially before COVID-19, were buoyed by millions of dollars in Payment Protection Program loans.

Since 2010, seven rural hospitals have closed across Kansas, including Sumner Community Hospital and St. Luke’s Cushing Hospital this year. A 2019 study indicated nearly one in every three hospitals in the state was at high financial risk.

When the pandemic began, and profitable nonessential surgeries were canceled as a buffer against overwhelming the health care system, many hospitals experienced a dramatic dropoff in patient volume and an increase in equipment expenses.

The federal-backed loans issued through the Payment Protection Program may be forgiven for businesses and nonprofits that used the money to prevent erosion of their workforce.

Related: Emergency paycheck loan program delivers $5 billion to 53,000 Kansas businesses

Related: Foster care providers turned to PPP loans as pandemic intensified family stress

Who received large PPP loans in Kansas?

Geary Community Hospital, a 49-bed facility in Junction City, had considered closing its intensive care unit the previous fall and was in danger of closing completely.

“We were already in serious financial trouble, and those first two weeks of the pandemic were even worse,” said Emily Emery-Shea, the hospital’s assistant chief financial officer. “The PPP loans kept employees working during a time where we saw a 50% decline in revenue.”

The hospital received $3.5 million in PPP loans, allowing it to meet payroll and focus on the future of the hospital.

Greenwood County Hospital received $1.3 million in PPP loans after the restriction on county hospitals was lifted. (Submitted)
Greenwood County Hospital received $1.3 million in PPP loans after the restriction on county hospitals was lifted. (Submitted)

“The outlook is substantially better than when the pandemic began due in large part to the PPP loans,” Emery-Shea said.

At the University of Kansas School of Medicine-Wichita Medical Practice Association, the clinical service arm for the school of medicine, an undisclosed amount of funds helped provide infrastructure to resume treatment in a safe and effective manner.

“We had to change how we provide services — especially internal medicine, where we do serve so many geriatric patients,” said Aaron Ryan, the association’s executive director. “The funds gave us the flexibility to strengthen our plan and meet the unique needs amid the pandemic.”

The association saw a decrease in outpatient visits of 50% to 60% from March to April. Ryan said that number is beginning to increase to make adjustments for patients.

Data made available by the Small Business Administration shows the University of Kansas School of Medicine-Wichita Medical Practice Association received a loan of $2-5 million. Ryan wouldn’t disclose the exact amount of funding received through the federal program.

“I don’t think that’s important to the story,” Ryan said.

Smaller health practices found themselves in similar payroll situations. Family Practice Associates of Western Kansas, in Dodge City, saw its clientele drop from about 175 per day to 50. Office manager Glenda Smith said things would have been tight without the $300,000 PPP loan it received.

“Had we not received that loan, I don’t think our five physicians would be working full time, and in effect that means we wouldn’t be able to provide services as thoroughly,” Smith said.

Appointments are up in frequency, although not quite to pre-pandemic levels, Smith said.

Greenwood County Hospital was in a better place before the pandemic than many rural health centers, said CEO Sandra Dickerson, but then county hospitals were shut out of the initial loan program. Dickerson said the hospital was nearing the point of layoffs when it became eligible to receive a loan.

“We were just managing and maintaining, so we jumped on those loans,” Dickerson said. “Beyond payroll, it allowed us to move the funding we would have used for payroll and pay the bills we had fallen behind on.”

The hospital was behind on paying vendors for protective equipment as it burned through supplies. The $1.3 million loan it received provided flexibility.

“I don’t know how much longer our vendors would have provided equipment without getting paid, and we certainly wouldn’t have made payroll,” Dickerson said.

Revenue has begun flowing back in, she said, thanks to rigorous telehealth and drive-thru appointments.

“We’re actually doing alright now, and the loan indirectly allowed us to provide these services,” Dickerson said. “The PPP program was a godsend.”

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Noah Taborda
Noah Taborda

Noah Taborda started his journalism career in public radio at KBIA in Columbia, Missouri, covering local government and producing an episode of the podcast Show Me The State while earning his bachelor’s degree in radio broadcasting at the University of Missouri School of Journalism. Noah then made a short move to Kansas City, Missouri, to work at KCUR as an intern on the talk show Central Standard and then in the newsroom, reporting on daily news and feature stories.

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