Financial Health of Hospitals ‘Dire’ Due to COVID-19

THURSDAY, July 23, 2020 (HealthDay News) — COVID-19 continues to cause financial peril for U.S. hospitals, according to a report released by the American Hospital Association (AHA).

Kaufman Hall conducted the analysis and considered demand, expenses, the CARES Act impact, and COVID-19 margin impact.

The analysis revealed that without further government support, margins could drop to −7 percent in the second half of 2020 and half of hospitals will be operating in the red. Hospital margins would have been −15 percent in the second quarter had it not been for CARES Act funding. But even with these funds, hospital margins are expected to decline to −3 percent in the second quarter of 2020. Median hospital margins pre-COVID-19 were 3.5 percent. Assuming a slow and steady decrease in COVID-19 cases, median margins could be −1 percent by the fourth quarter of 2020. However, with periodic COVID-19 surges similar to the current case increases, margins could sink to −11 percent.

“This pandemic is the greatest financial threat in history for hospitals and health systems and is a serious obstacle to keeping the doors open for many,” Rick Pollack, AHA CEO and president, said in a statement. “While we appreciate the support from the administration and Congress, we need further help to stay afloat to continue our mission of caring for patients and communities.”

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