Higher expenses for labor, drugs and supplies, along with the cost of care delayed during the pandemic, is likely to continue to stress hospitals’ financial health throughout this year, according to a new analysis from Kaufman Hall funded by the American Hospital Association.
Kaufman Hall projects hospitals nationwide will lose an estimated $54 billion in net income over the course of the year, even taking into account federal Coronavirus Aid, Relief, and Economic Security (CARES) Act funding from last year.
Contributing factors include:
Sicker patients.
Hospitals are seeing more high acuity, inpatient cases—including COVID-19 patients—requiring longer lengths of stay than prior to the pandemic in 2019. While such cases are contributing to revenue increases, any gains are offset by higher care costs for treating patients with more severe conditions.
Higher expenses.
Expenses are rising across the board, as hospitals face increasing costs for labor, drugs, purchased services, personal protective equipment (PPE), and other medical and safety supplies needed to care for higher acuity patients.
Fewer outpatient visits.
Hospital outpatient visits—which tend to have lower expenses and higher margins—continue to grow, but remain depressed compared to 2019 levels. They have yet to fully recover after plummeting with nationwide shutdowns and COVID-19 mitigation efforts in the early months of the pandemic in 2020. Read more.
