Coronavirus Creating Worst Financial Crisis For Hospitals In History, Hospital Group Says

The American Hospital Association said Tuesday hospitals are facing their worst financial crisis in history, with the coronavirus pandemic likely to cost them at least $323 billion this year, in large part because of lower patient volumes and higher costs for personnel and supplies.

"While potentially catastrophic, these projected losses still may underrepresent the full financial losses hospitals will face in 2020 as the analysis does not account for currently increasing case rates in certain states or potential subsequent surges of the pandemic occurring later this year," the AHA said in a report.

Hospitals reported inpatient volume is off 19.5% and outpatient volume is down 34.5% compared with last year because many states barred elective surgeries, a major source of income for hospitals. Two-thirds of hospitals said they don’t expect volume to improve for the rest of the year.

“The slow recovery of inpatient and outpatient volumes to baseline levels, coupled with continued and increasing COVID-19 infection rates, has exacerbated these financial losses,” the report said.

The report projects $120.5 billion in losses for the final half of the year. Between March and the end of June, hospitals lost $202.6 billion.

“This pandemic has shown once again why America’s hospitals and health systems are indispensable cornerstones of their communities. However, hospitals and health systems are in the midst of the greatest financial crisis in our history as we continue to fight this pandemic at the same time that non-COVID patient visits remain down,” AHA President and CEO Rick Pollack said in a press release.

Pollack called on Congress and the administration to provide relief.

“No hospital is going to come through this unscathed,” Jacqueline Barton True, vice president of rural health programs at the Washington State Hospital Association, told Infectious Disease Special Edition. “I have a lot of concern about our ability to weather this, and what we look like on the other side. I think it is very possible that without significant help from the federal government, there will be closures.”

The AHA report did not include the cost of treating COVID-19 itself – which at least one report said can cost $1.1 million -- or increased acquisition costs for drugs and equipment other than personal protective gear. The cost of acquiring sufficient PPE was estimated at $3.8 billion for the second half of the year.

By midafternoon Tuesday, more than 2.6 million U.S. coronavirus infections had been confirmed along with more than 126,500 deaths. Some 31,934 people were hospitalized.

Many states were requiring hospitals to maintain a certain number of vacant beds in case cases surge. They’re also requiring hospitals to have enough PPE for 14 to 30 days and testing for both patients and staff.

“Hospitals and health systems are committed to ensuring the safety of their patients and staff, as well as improving the health of our country,” the report said. “For this reason and in addition to state mandates, many hospitals and systems have moved to implement similar policies on their own. On the other hand, it’s likely that these policies will extend financial recovery for hospitals and health systems because of their effects on patient flow and hospital volumes.”

Bonus pay and other compensation also were boosting costs as was uncompensated care for patients without health insurance.

The AHA estimates are based on a survey of 1,360 hospitals earlier this month. A third of the respondents were from rural hospital and health systems.

“These losses put hospitals’ survival at serious risk. As the country continues to confront the unique and perilous challenges of COVID-19, communities across America cannot see hospitals close and access to life-saving treatment be restricted – action is needed urgently to support our nation’s hospitals and health systems and their front-line staff,” the report said.