Hospitals Plead for Bailout in Face of Runaway Pandemic Bills

U.S. hospitals face up to $122 billion in lost revenue this year as the pandemic continues its rampage, threatening to push more critical-care centers into bankruptcy or out of business entirely.

Even a best-case scenario would cost hospitals $53 billion of revenue, according to a new Kaufman, Hall & Associates report for the American Hospital Association. That’s on top of more than $323 billion in reduced revenue and higher expenses last year. U.S. hospitals were already hard-pressed before the Covid-19 outbreak, especially in poor and rural regions, with more than 30 going bankrupt in the year preceding the pandemic.

“We need additional funding to both participate in the vaccination efforts as well as care for large numbers of critically ill patients, maintain sufficient staffing and continue to acquire enough personal protective equipment and other resources necessary to do this critical work,” according to a Thursday letter from the group to Senate leaders.

How quickly hospitals recover depends on the vaccine rollout, the spread of more infectious strains, and how potential patients behave -- both in terms of how cautious they remain and how willing they are to return for not only profitable elective procedures but even for emergencies.

“Even as restrictions lifted, our data found that many patients continued to hold off on rescheduling elective procedures in certain categories, like plastic surgery and orthopedic procedures,” said Matt Hawkins, chief executive officer of Waystar, a company that works with hospitals on billing.

Falling revenue squeezed hospitals as safety and treatment costs soared, with a 14% rise in labor and 17% for drugs last year, the report said. Even before the pandemic, hospitals operated on thin margins, with a median of 2.5% in 2019, according to the report.

U.S. community hospital revenues totaled $4.1 trillion in 2019, the most recent year available, according to the AHA. The number of facilities dropped to 6,090 from 6,146 the previous year, and hospital beds shrank to around 920,000 in 2019 from 924,000, continuing a decades-long trend.

“The impact of any type of additional losses is significant for most organizations,” said Lisa O’Connor, a senior managing director at FTI Consulting Inc., who specializes in health care.

Hospitals with fewer privately insured patients will be more affected because Medicaid and Medicare payments are lower. But all hospitals will have to grapple with staffing shortages, the eventual loss of federal pandemic funds, and uncertainty on just how much business will rebound, O’Connor said.

“Are patients really going to come back to hospitals for elective procedures?” she said.

©2021 Bloomberg L.P.

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