Hospitals Slated to Lose $54B in 2021 As Pandemic Rages On

Hospitals are estimated to lose $54 billion in net income this year despite receiving federal aid to offset revenue losses and added expenses from the ongoing COVID-19 pandemic, a new report reveals.

Hospitals and health systems are treating sicker patients, including those infected by the coronavirus’ new variants and patients who put off care during the pandemic, the report published by the American Hospital Association (AHA) and prepared by Kaufman, Hall & Associates, LLC states.

These patients require longer hospital stays and more services than patients seen by hospitals prior to the pandemic. While this has contributed to revenue gains over the past year, the costs of treating higher acuity, inpatient cases have largely offset any income hospitals have received, the report says.

More than a third of US hospitals are estimated to maintain negative operating margins through the year’s end as expenses continue to be higher than pre-pandemic levels and fewer patients come in for outpatient visits.

“America’s hospitals and health systems continue to face significant, ongoing instability and strain as the COVID-19 pandemic endures and spreads,” Rick Pollack, AHA president and CEO, said about the report’s findings. “With cases and hospitalizations at elevated levels again due to the rapid spread of the Delta variant, physicians, nurses and other hospital caregivers and personnel are working tirelessly to care for COVID-19 patients and all others who need care. At the same time, hospitals are experiencing profound headwinds that will continue throughout the rest of 2021.”

In fact, hospital financial losses could increase as the country faces a challenging fall, researchers admit. Healthcare industry leaders have been warning of a possible “twindemic” as the country enters flu season while hospitals prepare for a possible surge in positive coronavirus cases during colder months when people tend to stay indoors.

Median hospital margins are already estimated to be 11 percent below pre-pandemic levels by the end of the year, and this projection does not account for recent increase in COVID-19 cases experienced across the country. Margin deficits “will inhibit hospitals’ ability to invest in growth or additional community services throughout 2021,” the report states.

HHS has announced another round of funding for hospitals and other healthcare providers still facing revenues losses from the COVID-19 pandemic. The federal department said earlier this month it will distribute $25.5 billion, including $8.5 billion from the American Rescue Plan for rural providers and a fourth round of general Provider Relief Funds totaling $17 billion, later this fall. The federal aid is part of the $178 billion earmarked for healthcare providers by coronavirus legislation in 2020 and 2021.

Federal aid has been key to keeping hospitals operating during the pandemic, the report indicates. Without the funds, losses in net income would have been as high as $92 billion, “which further emphasizes the magnitude of losses hospitals will likely continue to face through the end of 2021,” researchers wrote.

However, the additional distribution of federal aid may not be enough to boost hospital financial standings with the “uncertain trajectory of the Delta and Mau variants” this fall.

“While many hospital leaders hoped 2021 would provide an opportunity to return their organizations to greater financial stability after the severe losses seen in 2020, those hopes are dimming as the virus continues to circulate throughout the population,” the report states.

“The resulting volatility—including the potential impact of the Mu variant—continues to hamper hospitals’ recovery efforts and contribute to widespread uncertainty in their long-term ability to serve the healthcare needs of their communities,” it concludes.