Hospitals require an immediate infusion of capital. 

When you walk into a hospital, you see droves of people in scrubs and white coats  The white coats are disappearing.  The personal protective equipment is out, but the frontline healthcare workers are there for you… for now. 

Mechanical ventilation is saving lives during this COVID-19 pandemic.  The issue is— we don’t have enough ventilators. Not even close to enough. In addition, our frontline medical staff is dangerously exposed.  What if we become ill? 

In Normal Accidents, by Charles Perrow, he noted that  “… multiple and unexpected failures are built into society’s complex and tightly coupled systems. Such accidents are unavoidable and cannot be designed around.”  

In other words… the current state of healthcare and hospitals struggling to stay afloat should not surprise anyone.  

You have read all sorts of articles about people being billed exorbitant amounts for an ER visit or a hospital stay.  No doubt those instances are true. Many of you might assume that hospitals are oozing cash from every window. You would be wrong. 

 Most hospitals run on razor-thin margins.  Most profitable hospitals come in at 1-2% net profit margins. It’s irrelevant if I am off a bit.   Many small hospitals have closed because of economic conditions. This will play out very poorly over the next few weeks as rural regions try to cope with all their COVID-19 patients.  

Ventilators: How we got here 

What many people do not understand is that hospitals are in the utilization rate business, not the excess capacity for emergency business.  This leaves us in a precarious situation when emergencies such as the COVID-19 pandemic arise. 

The current fixation on standard utilization rates (SURs) for ventilators, for example, is part of the issue. This creates a system that has no innate capacity to deal with spikes in demand. Look at how the industry has gone from device utilization rates to deviance from predicted rates. That’s fine if you’re an airline, but dangerous if you’re in a business like healthcare.

You can’t predict how many ventilators or protective suits you will need in a business prone to surges, like hospitals in a pandemic. You must run with slack, not via deviance from SURs. Calculating steady-state deviance from an unreliable forecast in a business prone to surges is … well, madness.

Hospitals require cash for PPE and ventilators now

Boeing and the cruise line industry appears to be first in line for bailouts from the government.  

We are here to tell you of a far more pressing group that requires immediate access to capital… your hospitals.  

Hospital capacity is dwindling.  The national stockpile was sorely underprepared for this pandemic.  Hospitals are rapidly running out of personal protective equipment (PPE), mechanical ventilators and other mission-critical products.  

The capacity of the healthcare system is NOT A FIXED VARIABLE.  If you require hospitalization you want to know that it is fully staffed and ready to save your life.  If hospital employees do not have proper PPE, they will start becoming sick. There are bench docs available to fill those places… but they will not be as equipped as the first string.  

The need for PPE is beyond a critical need.  Our healthcare system capacity will drop when our staff becomes ill.  In Northern Italy nearly 20-25% of medical staff became ill. Many died.  That has a profound impact on their ability to care for their patients.  

Most hospitals have cut out non-emergent surgery. That will have a significant and dramatic effect on their cash flow.  Hospitals do not have other means of generating capital. Whether or not you are a fan of a fee for service system or not is irrelevant at the moment.   

The president activated the Defense Production Act but has not yet utilized those powers to get the manufacturing sector to produce PPE, ventilators and other needed supply chain products.   These are not the time for baby steps. We need big, bold action, and we need it to be decisive and surgical in precision to areas that can immediately prevent loss of life. Both ours on the frontline of healthcare — and yours.  Yes… I fully support the other measures being signed off on at this time. But I am not hearing anyone on Capitol Hill talk about the health of the hospital system in the United States. This needs to change.  

There are no currently available methods to immediately infuse capital directly into the hospitals. That needs to change… and rapidly.  I am watching this heavy large ship run slowly towards us… and we need to alter its course. Afterward, as part of the post mortem examination of this pandemic, we need to all read Charles Perrow’s book before we come back to the table with an alternative to SURs.  

Staffing our Hospitals During COVID-19

Staffing at our hospitals is at an all hands on deck level.  The frontline workers are preparing for and starting to treat an enormous number of COVID-19 patients.  There are a number of physicians, nurses, therapists, respiratory therapists and thousands of other people who keep the machine humming waiting in the background too.  There’s excess capacity, for now.  That will change very rapidly.

Italy and other countries are watching as a significant number of their physicians and healthcare workers become sick. Excess capacity is needed to fill that void, or the overall capacity of the system goes down. As capacity diminishes the level of care could go down as well.   Fatalities from COVID-19 rise as a result.  

Hospitals run on razor-thin margins. They do not net anything close to what you think they do.  We can argue about there being too many admins or too much tech, but that’s an argument for another day.  

Hospitals will soon be struggling to meet payroll and keep their doors open.  This is not too far off.  While I am in full support of getting immediate capital to the millions in our country who need it.. I am appalled at seeing the administration brag of their support of the airline and cruise industry– without mentioning the most important members of the healthcare infrastructure.  


The day will come when you will need us to be here for you. As long as we are well, we will be there.  We need a place to work.  You need your hospitals to remain open.  

Share this with your networks.  We need our hospitals to be front and center in the economic discussions about which industries require immediate assistance.  


Disclaimer: I do not speak for my employer 


Disclaimer:  this information is for your education and should not be considered medical advice regarding diagnosis or treatment recommendations. Some links on this page may be affiliate links. Read the full disclaimer.

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About the author:

Howard J. Luks, MD

Howard J. Luks, MD

A Board Certified Orthopedic Surgeon in Hawthorne, NY. Dr. Howard Luks specializes in the treatment of the shoulder, knee, elbow, and ankle. He has a very "social" patient centric approach and believes that the more you understand about your issue, the more informed your decisions will be. Ultimately your treatments and his recommendations will be based on proper communications, proper understanding, and shared decision-making principles – all geared to improve your quality of life.

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