SCOTUS HOME VISIT to the Healthcare Industry: The Economic Impact of Mandatory Vaccinations | Nelson Mullins Riley & Scarborough LLP
The Supreme Court of the United States in a by curie Notice of January 13 ruled that the Secretary of HHS (United States Department of Health and Human Services) does not have exceed its legal authority by requiring that, in order to remain eligible for Medicare and Medicaid reimbursement, all health care providers, with the exception of medical practices not regulated by the Centers for Medicare & Medicaid Services (CMS), medical organizations Organ supply companies, portable X-ray providers and some healthcare professionals practicing solely in fully remote telehealth, must ensure that their employees are vaccinated against Covid-19. The Court, in a 5-4 decision, held that the Secretary had adequately considered alternatives to mandatory vaccination, even though the final interim rule went into effect immediately without a sunset provision or any review or assessment of comments from the public, which is generally required under USC 553(b), 553(c). Interestingly, the Court, in both its decision and its dissent, did not consider the scientific data on natural immunity, the incident of Covid infection and recovery among healthcare workers, or the significant easing of hospitalizations and mortality data from the most recent Covid mutation, which is now considered the dominant strain of infection, Omicron. What is even more concerning because of his decision is the possible serious consequence (involuntary or not) of the dismissal of almost 3 million health care workers between the end of January and the end of March 2022.
This decision will encourage many healthcare providers to consider either reducing the workforce of their healthcare platform (elimination of elective surgeries, closure of maternity wards, redirection of critical patients to other establishments, faster movement of patients to healthcare at home, etc.) some leeway. According to the American Hospital Association (“AHA”), after the pandemic and even before the Mandate decision, collective turnover in intensive care units, nursing units and emergency departments increased from 18% to 30 %. There is no doubt that when a nurse leaves a healthcare organization, the vacancy affects the cost of operation many times more than the amount of salary paid to the nurse. According to Nursing Solutions, Inc., the average length of time it takes to fill a nursing position is 85 days – and more than three months for a specialist nurse position. While a replacement nurse is located, the healthcare organization must rely on “travellers” and direct care staffing agencies who charge super competitive rates. Last year alone, the use of expensive employment agencies to fill staffing gaps increased 250% over last year, according to the Florida Health Care Association, October 25, 2021. A turnover of a single nurse whose salary ranges from $28,800 to $51,700 can translate to an average cost of $3.6 to $6.5 million for the healthcare organization, considering factors such as the cost of an employee’s reduced productivity in the weeks leading up to their departure, the time between departure and the replacement of the employee, overtime paid to cover the replacement, high fees from external recruitment agencies, advertising for job vacancies, background and credential checks, onboard training for new hires, and climbing the learning curve on the new clinical culture.[3
None of the above costs take into account additional expense burdens for healthcare organizations coming from the mounting labor shortage at the nursing assistant and home health aides level, which are considering leaving the healthcare setting in droves and making more money and less aggravation in the retail field. Bloomberg reports that there will be a shortfall of 3.2 million lower-wage workers among all the healthcare organizations by 2026. What is the economic effect of the mandate on healthcare organizations? Well, it’s obvious that in the early spring of this year, there will be fewer health care workers and the costs of providing health care will rise despite the injection of another $10 billion in relief funds. for Stage 4 providers under the CARES ACT. Will economic stress create more interest in turning to alternatives to bankruptcy to give these organizations time to adjust to the new normal? Even before the warrant was issued, the AHA projected that hospitals would lose more than $54 billion in net income in 2021. This loss comes after taking into account the $176 billion injection of CARES ACT funding, which does not did not directly solve the current dilemma of loss of manpower. It is likely that the losses for 2022 will be even more dramatic. Also, not factored into these numbers is the worsening insolvency affecting the long-term care industry, where 86% of nursing homes and 77% of residences- services indicated that their labor situation has worsened over the past three months.
Certainly, the additional economic stress to come among healthcare organizations due to potential workforce burnout will present several challenges in a bankruptcy environment. On the one hand, practitioners will need to figure out how best to use the post-petition money between important workforce-related goals such as retention bonuses, vacation pay, overtime payments , recruitment agency fees, recruiting, advertising, accreditations and new employee policies, and equally demanding needs such as rent and other essential healthcare providers. Particular attention will be paid to carefully tailored DIP funding to ensure the organization’s viability through bankruptcy and until exit. As private equity has played an increasingly important role in the healthcare sector and its desire to use roll-ups and consolidations, healthcare financial advisory specialists will need to be employed to help economic actors to understand the mechanism for exiting bankruptcy, taking into account the balance in action between the balance of the workforce and the quality of the continuity of care. Ultimately, more healthcare organizations will need sound professional healthcare insolvency advice to find a suitable haven and fresh start in the difficult months ahead.
 Of note regarding the timing of his ruling and his science-based rationale, one of the trial judges estimated that as of January 2022, there were over 100,000 children in the United States currently in ICUs while that the actual total was much lower. Additionally, although the Wall Street Journal reported on January 26, 2022 that the Centers for Disease Control and Prevention (“CDC”) said Covid-19 deaths in the United States exceeded 2,100 per day, the highest for nearly a year, the article quotes Robert Anderson, head of mortality statistics, as saying, “You can have a disease that is less lethal to one particular person than another, like Omicron, but if it’s more contagious and reaches more people, then you are more likely to have a lot of deaths. As this article goes to print, see also Dr. Martin Makary, “The High Cost of Disparaging Natural Immunity to Covid,” Wall Street Journal, January 26, 2022, concluding that “the superiority of natural immunity over vaccinated immunity is clear”.
 Dave Muoio, Pandemic-era overtime, agency staff costs US hospitals an additional $24 billion a year, Fierce HealthcareOctober 8, 2021.
 See 2021 NSI National Health Care Retention & RN Staffing Report, published by NSI Nursing Solutions, Inc., March 2021.
 Lauren Coleman Lochner, US hospitals pushed to financial ruin as nurses quit during pandemicBloomberg, December 21, 2021.
 See FTI Healthcare Industry Sector Outlook, FTI Consulting, December 2021.