Pandemic Drains Hospital Finances

By: - March 24, 2021 12:00 am

A nurse checks patient records at Providence Cedars-Sinai Tarzana Medical Center in Los Angeles. More than a year into the pandemic, a new financial analysis forecasts substantial financial losses for the nation’s hospitals. Damian Dovarganes/The Associated Press

As the second year of the pandemic begins, nearly 4 in 10 of the nation’s more than 6,000 hospitals are expected to operate at a loss this year, according to a new analysis prepared for the American Hospital Association.

But that’s only if the largest vaccination program in U.S. history runs smoothly and COVID-19 hospitalizations continue to drop. A pause in vaccinations or a new surge in COVID-19 cases could result in at least half of all hospitals operating in the red this year, the analysis found.

The financial pain began earlier in the pandemic, when a near shutdown dried up the elective surgeries and routine medical care hospitals rely on for the bulk of their revenues. Now, as hospitals slowly resume normal operations, revenue shortages persist.

For rural hospitals, the financial prospects are even worse. Under the most optimistic scenario, profit margins for rural hospitals are expected to decline 38% this year.

Last year, 16 of the nation’s roughly 1,800 rural hospitals shuttered, in part due to revenue declines caused by the pandemic: three in Florida, two each in Kansas, Tennessee and West Virginia, and one each in Georgia, Maryland, Minnesota, Missouri, Pennsylvania, Texas and Virginia.

Over the past decade, 133 rural hospitals have closed, primarily in the South. Nearly 1 in 5 Americans live in rural areas and rely on local hospitals for a range of medical services.

“As the COVID-19 pandemic enters its second year, America’s hospitals and health systems remain on the frontlines caring for patients and fighting this virus,” said Rick Pollack, AHA president and CEO in a public statement. Federal and state money helped keep hospitals afloat last year, he said, but “hospitals and health systems will need further relief to meet the health care needs of their patients and communities.”

In 2020, hospitals were projected to lose $323 billion, according to the hospital association. And at least four dozen hospitals entered bankruptcy or closed. The new forecast estimates hospitals could lose as much as an additional $122 billion in 2021, threatening already slim profit margins.

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Christine Vestal

Christine Vestal covers mental health and drug addiction for Stateline. Previously, she covered health care for McGraw-Hill and the Financial Times.