A new analysis prepared by Kaufman, Hall & Associates, LLC and reported in a press release from the American Hospital Association shows that higher expenses for labor, drugs and supplies as well as patients putting off care during the ongoing COVID-19 pandemic will continue to negatively impact the financial health of hospitals and health systems throughout 2021.
As hospitals and health systems continue to see sicker patients—including COVID-19 patients and patients who put off care during the pandemic—they are requiring longer lengths of stay and more services than prior to the pandemic in 2019. According to news reports, many hospitals are also spending a lot more resources on contract or travel nurses due to staffing shortages. In recent months, the spread of the highly contagious Delta variant has set back hospitals even more. The 7-day average of new hospital admissions of patients with COVID-19 increased 488%, from 1,900 on June 19 to 11,168 on September 14, according to recent data from the CDC.
The report projects hospitals nationwide will lose an estimated $54 billion in net income over the course of the year, even after taking into account federal Coronavirus Aid, Relief, and Economic Security (CARES) Act funding from last year. However, the uncertain trajectory of the Delta and Mu variants in the U.S. this fall could result in even greater financial uncertainty for the hospital field, despite the recent announcement of additional provider relief funds, which have not yet been allocated or distributed.
The report incorporates actual hospital performance data in the first and second quarters of this year, from before the latest surge. Projections were made for the remainder of 2021 based on these data. Key points reported include:
- Higher costs of caring for sicker patients and fewer outpatient visits than pre-pandemic levels could lead median hospital margins to be 11% below pre-pandemic levels by year’s end.
- More than a third of hospitals are expected to end 2021 with negative margins.
- If there were no relief funds from the federal government, losses in net income would be as high as $92 billion, which further emphasizes the magnitude of losses hospitals will likely continue to face through the end of 2021.
- After facing catastrophic losses in 2020, our nation’s hospitals, health systems and caregivers continue to be severely tested by the COVID-19 pandemic.