U.S. Hospitals Risk $122 Billion 2021 Revenue Loss on Pandemic

U.S. hospitals face up to $122 billion in lost revenue this year as the pandemic continues its rampage.

Even a best-case scenario would cost hospitals $53 billion, according to a new Kaufman, Hall & Associates report for the American Hospital Association.

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.

Declining revenues slammed hospitals as safety and treatment costs have 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 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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