A report released by the American Hospital Association (AHA) on May 5 confirms the tremendous financial strain that hospitals and health systems on the front lines in the fight against COVID-19 are under. The report, entitled “Hospitals and Health Systems Face Unprecedented Financial Pressures Due to COVID-19,” estimates a total financial impact of $202.6 billion in losses resulting from COVID-19 expenses and lost revenue for hospitals and health systems over the four-month period from March 1, 2020 to June 30, 2020 – or an average of over $50 billion in losses a month.
The report begins by noting that “America’s hospitals and health systems have stepped up in heroic and unprecedented ways to meet the challenges of COVID-19. As outbreaks have occurred across the country infecting more than 1 million people, hospitals have ramped up testing efforts and are treating hundreds of thousands of Americans in an effort to save lives and minimize the virus’ spread. This includes establishing testing tents, adding general and intensive care unit (ICU) bed capacity, and developing COVID-19 units to isolate and treat patients with the disease while safeguarding the health of other patients and hospital staff. These challenges have created historic financial pressures for America’s hospitals and health systems. Hospitals have cancelled non-emergency procedures, and many Americans are postponing care as they shelter in place to stop the spread of the virus. Treatment for COVID-19 has created incredible demand for certain medical equipment and supplies as the virus has disrupted supply chains, increasing the costs that hospitals face to treat COVID-19 patients. At the same time, COVID-19 has led to unprecedented job losses, giving way to a rise in the number of uninsured. And while doctors, nurses, and other health care workers have met the COVID-19 challenge with heroic efforts, many hospitals and health systems, especially those located in hotspot areas of the pandemic, are supporting them by providing essentials like child care, transportation, and in some cases, housing.”
Given all those factors, the AHA notes, “Hospitals face catastrophic financial challenges in light of the COVID-19 pandemic. The AHA estimates a total four-month financial impact of $202.6 billion in losses for America’s hospitals and health systems, or an average of $50.7 billion per month.”
In fact, the report states, four additional factors could add even more costs for hospitals. Those four are drug shortages because of fractured pharmaceutical supply chains; increased wage and labor costs because of increased overtime; the additional costs of ventilators and other non-PPE (non-personal protective equipment) supply costs; and added costs involving the creation of additional treatment space, through the setting up of additional testing tents, ICU beds, and other treatment beds.
On the policy front, the AHA acknowledges federal support that has made a difference. “Congress has moved quickly to support the country during the COVID-19 pandemic,” the report notes. “Congress allocated $100 billion for provider relief in the Coronavirus Aid, Relief, and Economic Security Act, and added $75 billion to the relief fund in the Paycheck Protection Program and Health Care Enhancement Act. However, the AHA has expressed concern with how the funds have been distributed and the timeliness of these payments.” And it adds that “More support is needed. Hospitals continue to experience losses from cancelled and delayed procedures, while incurring increased costs for treating patients suffering from COVID-19 and purchasing the equipment and supplies necessary to ensure the health and safety of patients, providers, and their families. Additional support will be critical, as the country moves into a new phase of recovery and rebuilding. During this time, we’ll need to address health disparities and ensure the health and safety of vulnerable communities. We’ll face new behavioral health challenges in light of all that our nation has experienced. And we’ll need increased resources to address clinical resiliency to support the health care workers who answered the call when the country needed them.”