A new analysis prepared by Kaufman, Hall & Associates LLC and released today by the AHA shows that even under the most optimistic scenario, including a smooth vaccine roll-out and reduced COVID-19 hospitalizations, 39% of hospitals would operate in the red in 2021, a marked increase over pre-pandemic baselines.
In addition, rural hospitals face median margins between 38% and 100% lower than baselines. The report underscores the threat hospitals face in their ability to provide essential services to patients and communities.
AHA President and CEO Rick Pollack said today on a call with media that hospitals continue to face the same three trends during the pandemic: climbing expenses, decreased revenue and taking care of an increased number of uninsured individuals because of economic conditions. “We have not bounced back in terms of maintaining financial stability,” Pollack said. “And — just as importantly — we are being set back in our ability to care for the sick, injured and keeping people healthy.”
Participating in the call, Cliff Megerian, M.D., CEO of University Hospitals Health System in Cleveland, said declining revenue combined with surging costs for personal protective equipment and other resources for COVID-19 patients “impacted our income by nearly $500 million. We are sincerely appreciative of the money that we see from the [Coronavirus Aid, Relief, and Economic Security] Act and the reimbursements from FEMA, but in all honesty, combined it buffered only 38% of that $500 million shortfall.”
Among other priorities, the AHA continues to urge Congress to extend through the end of the year the moratorium on the 2% Medicare sequester cuts.
David Goldberg, president and CEO of Mon Health System based in Morgantown, W.Va., said the sequester cut would cost the health system about $1.5 million on top of already rising costs and declines in patient care revenue. “We've hired doctors to be able to get into the rural communities to keep people closer to home, drop the cost and improve their access,” Goldberg said. “What we can't afford today is sequestration of another $1.5 million of impact.”
Scott Wester, president and CEO of Our Lady of the Lake Regional Medical Center in Baton Rouge, La., said the impending Medicare cuts follow a 13% increase in Medicaid patients, rising number of uninsured patients and surging costs. “Salary costs are way up, pharmacy costs are way up, and we continue to see acceleration in our supply chain expenses as well,” Wester said.
Today’s analysis builds on another Kaufman Hall report released last month that forecast total hospital revenue in 2021 could fall between $53 billion and $122 billion from pre-pandemic baselines. A 2020 AHA report estimated the nation’s hospitals and health systems could lose at least $323 billion through last year.
“It is critically important that Congress act as soon as possible to avoid real cuts in payments to providers on the front lines while we’re still dealing with a once-in-a-century pandemic that remains a national health emergency,” Pollack said.