Pandemic setting U.S. providers back by more than $50 billion per month

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Pandemic setting U.S. providers back by more than $50 billion per month

by John R. Fischer, Senior Reporter | May 07, 2020
Business Affairs
U.S. healthcare providers are expected to collectively lose a total of $202.6 billion from COVID-19 expenses and revenue losses between the beginning of March and end of June.
Hospitals and health systems are losing an average of more than $50 billion per month, says a new report issued by the American Hospital Association.

The financial impact on providers from COVID-19 expenses and revenue losses between March 1 and June 30 adds up to $202.6 billion, according to the analysis, which includes costs for COVID-19 hospitalizations, canceled and foregone services, purchases of personal protective equipment and additional support for hospital workers.

While the federal government has provided relief funding to providers, the funds are intended to help them stay open rather than build them back up to pre-COVID-19 levels, and are being distributed to all healthcare providers, with only a portion going directly to hospitals, as well as physicians and other clinicians, laboratory and testing facilities, medical equipment providers and other healthcare-related entities.

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“The fight against this virus has created the greatest financial crisis in history for hospitals and health systems,” said AHA President and CEO Rick Pollack in a statement. “While we appreciate the support and resources from Congress and the administration, many hospitals are still on the brink. We need further support and resources to ensure that we can continue to deliver the critical care that our patients and communities are depending on while also ensuring that we are prepared for the continuing challenges we face from this pandemic as well as other potential emergencies.”

The Congressional Budget Office projected prior to the pandemic that between 40% and 50% of hospitals could face negative margins by 2025 due to low payment rates from government payors. The virus has exasperated these figures, with cancellations on elective services and stay-at-home orders drying up strong revenue streams.

Many, if not all providers face increasing costs, supply shortages, and surges in hospitalizations and ICU patients. The Centers for Disease Control and Prevention estimates the cumulative hospitalization rate to be 29.2 per 100,000 people, with a rate of 95.5 per 100,000 Medicare-aged individuals and 47.2 per 100,000 people between 50 and 64. Treating a patient with COVID-19 could cost more than $20,000 and over $88,000 for those that require ventilator support, according to the Kaiser Family Foundation.

The report projects hospitals and health systems in the U.S. will collectively suffer a net financial loss of $36.6 billion for COVID-19 hospitalizations. Its figure is based on estimates it took of the total number of COVID-19 hospitalizations in the U.S. between March 1 and June 30; the incremental cost of a COVID-19 hospitalization; and the expected reimbursement from private and government payers for COVID-19 hospitalizations. This includes payments for COVID-19 patients, from March to June 2020 treating COVID-19 patients alone.

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