REPORT: U.S. Hospitals Suffering Financial Damage as a Result of COVID-19 Pandemic

Kaufman Hall

The nation’s hospitals are suffering significant financial damage as a result of the COVID-19 pandemic response. Kaufman Hall’s data from more than 800 U.S. hospitals shows that volume and revenue declines, along with flat to rising expenses, resulted in a dramatic fall in margin within a matter of weeks, plunging not-for-profit hospitals, which historically operate on thin margins, deep into the red.

“The data paints a dire picture for U.S. hospitals,” said Jim Blake, managing director of Kaufman Hall. “While the nation is relying heavily on our healthcare system, the COVID-19 response actions are having a devastating financial impact on these organizations. These initial numbers only reflect the first two weeks of the COVID-19 response and likely indicate more negative results in the future.

“Hospitals across the nation are continuing to weather the storm in regards to the COVID-19 pandemic, and we won’t fully understand the scope of the total damage for quite some time,” Blake continues. “To recover, healthcare leaders need to understand the big picture, establish a long-term financial recovery plan, and begin the complex process of securing funding from government agencies and other sources. Those are efforts that we see leaders beginning today and expect will play out for months and years to come.”

National Hospital Flash Report 

Kaufman Hall’s latest edition of the National Hospital Flash Report, based on March data from more than 800 U.S. hospitals, shares the dramatic impact.

Margins: Operating margins dropped 150 percent year-over-year, operating EBITDA margins fell more than 100 percent year-over-year, and operating margins fell 170 percent below budget for the month.

Hospital Volumes: Operating Room minutes were down 20 percent year-over-year, Emergency Department visits dropped 15 percent year-over-year, and the median hospital occupancy rate was 53 percent for the month.

Hospital Expenses: Labor expenses were up 3 percent year-over-year, and non-labor expenses were up 1 percent year-over-year.

Revenue: Budgeted inpatient revenue was down 13 percent in March, budgeted outpatient revenue was down 17 percent in March, and bad debt and charity care rose 13 percent year-over-year.

For more statistics and details, please see the National Hospital Flash Report.

Kaufman Hall provides a unique combination of software, management consulting and data solutions to help society’s foundational institutions realize sustained success amid changing market conditions. Since 1985, Kaufman Hall has been a trusted advisor to boards and executive management teams, helping them incorporate proven methods, rigorous analytics and industry-leading solutions into their strategic planning and financial management processes, with a focus on achieving their most challenging goals.

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