Here's why Minnesota doesn't have enough hospital beds right now

One update from state officials this week on the COVID-19 epidemic included details on facilities to house more hospital beds.

So far five usable sites have been found for up to 600 beds, said Joe Kelly, the state's homeland security and emergency management director, part of a plan for 2,750 potential beds. A thousand of them would be in the Twin Cities metro area.

His hope is that the additional in-house capacity Minnesota's hospitals are generating will be enough and those temporary sites won't be needed.

To put 2,750 rooms into some context, as of the latest state data, the normal hospital capacity was just more than 11,000 beds. Roughly half of those were in the Twin Cities metro area, where most of the state's people live. And the Twin Cities easily had the highest hospital occupancy rates in the state, north of 70%.

Digging into the question of how a state with health care as good as ours could need temporary field hospitals, the first thing to realize is there wasn't much unused hospital capacity before the pandemic. Instead our health system is of a size meant to handle a normal patient load — cardiac care, cancer treatments, surgeries following accidents and so on.

Unused capacity costs money. Our largely nonprofit health care system in Minnesota is far too competitive to allow for too much of that.

Nobody's system has really been built for a pandemic, of course, but the U.S. generally has far fewer hospital beds per capita than many other wealthy countries, although about in line with Canada and United Kingdom, according to data from the Peterson Center on Healthcare and Kaiser Family Foundation.

In Minnesota, the numbers are not way out of line with national averages, although our health care system consistently ranks near the top in overall performance, coming in behind only Hawaii and Massachusetts in the most recent Commonwealth Fund ranking.

One of the reasons there's not a lot of excess capacity in hospitals is that health care in this state was efficient, Dr. Rahul Koranne, president and CEO of the Minnesota Hospital Association, said earlier this week.

One measure of presumed efficiency is health care spending per Medicare beneficiary. In Minnesota, the average spending was about 10% less than the national average of around $10,100, as of the most recent data, although spending was higher in Minnesota than in any of our four closest neighbors.

This system, of course, is facing a big test, and the 2020 crisis starts with the fact that Minnesota's hospitals segment was already not that far from a break-even business.

Allina Health, one of the state's premier integrated systems, booked about $4.2 billion in patient care revenue in 2019, according to its audited financial statements, but spent nearly $4 billion just on staffing, services and supplies. It ended up with an operating income margin for the year that rounded to 1%.

"Whammy number two" for hospitals, said Koranne, is buying equipment and supplies (to the extent they can) to care for the expected surge of COVID-19 patients. The hospitals are busy adding capacity inside their buildings right now, not just spaces designed for patient care but even things like cafeterias.

Then next up is the blow for discontinuing elective procedures, primarily to preserve hospital supplies to help meet the coming demand from more COVID-19 patients. These are procedures that can safely be put off, though not indefinitely of course, and with every expectation that the provider helps the patient in the meantime with medications and the like.

That's why we've seen this week, at M Health Fairview, Essentia Health and others, staff furloughs and other expense reductions. Essentia said it faces a 20 to 40% decline in revenue, characterizing that as roughly in line with what other health systems expect this year.

Meanwhile, the kinds of health problems that require a lot of care will still be occurring.

This week, I ran across a state report on the health of Minnesotans that would've been sobering to read on a sunny spring day with no pandemic. It tallies up the toll of serious diseases, including pages of "malignant neoplasms," a term that somehow makes these cancers sound even worse.

When our state's governor talks about the absolute necessity of maintaining social distancing to slow down the spread of COVID-19, by never gathering in groups, giving people at least 6 feet of space and simply staying home if possible, this is part of what he's talking about.

The more we can stretch out or tamp down the COVID-19 epidemic, the more capacity we can preserve for the many Minnesotans needing health care this year for any number of reasons.