Hospital finances in 2021: 10 things to know

Lower patient volume, canceled elective procedures and higher expenses tied to the COVID-19 pandemic have created financial challenges for some hospitals, while others are seeing their finances begin to improve.

10 things to know about hospital finances:

• The pandemic could cause U.S. hospitals to face between $53 billion and $122 billion in revenue loss this year, according to a study from healthcare consulting firm Kaufman Hall commissioned by the American Hospital Association.
• Under a scenario in which there is complete recovery of patient volume, quick vaccine progress and a sustained decline of COVID-19 cases, hospitals could lose $53 billion in revenue. This would include a $27 billion loss in outpatient revenue, $17 billion in inpatient revenue and $9 billion in emergency department revenue.
• Under a scenario in which there is a partial recovery of patient volumes, slow vaccine progress and cyclical COVID-19 surges, hospitals could lose $122 billion. This would include $64 billion in lost outpatient revenue, $41 billion in lost inpatient revenue and $17 billion in lost emergency department revenue.
• Last year, hospitals experienced increases in certain expenses, including those related to drugs, supplies and labor, and those expense pressures could continue this year, according to the Kaufman Hall report.
• Increased costs threaten the financial outlook for the hospital sector, and hospitals will face a challenging financial environment this year, according to reports by Fitch Ratings and Moody’s Investors Service.
• Hospital operating margins fell nearly 27 percent between December 2020 and January 2021, according to Kaufman Hall.
• Many hospitals across the country took a financial hit from the COVID-19 pandemic, but some large health systems were still profitable in 2020. Their financial performance was fueled by several factors, including higher investment returns and higher-acuity patients.
• Several for-profit and nonprofit systems that have released their full-year 2020 results have reported net income of $1 billion or more.
• A variety of issues have put rural hospitals in a fragile financial position. Last year, 20 hospitals in rural communities closed, making 2020 a record year for rural hospital closures.
• Rural hospitals could be offered some relief under the $1.9 trillion COVID-19 package President Joe Biden signed March 11. It provides $8.5 billion for rural healthcare providers.  Beckers Hospital Review