For many health systems and hospitals, the numbers are ugly.
“Our costs are going up, increased expenses are coming, and revenues will be compressed. That means we’re digging out of a larger hole to build budgets going forward and get back to a level of fiscal health where we can continue to re-invest in the business,” Marna Borgstrom, CEO of Yale New Haven Health, said the Health Evolution article How CEOs are reimagning budgets amid COVID-19.
With patients putting off medical procedures and avoiding care, many hospitals and health systems are feeling the financial strain. Borgstrom’s Yale New Haven will lose money for the first time in her 40 years at the health system. Already it has lost $208 million in the first half of its fiscal year.
In its efforts to lobby the federal government for more assistance legislation, American Hospital Association hasn’t been shy about the financial situation of many hospitals and health systems thanks to the COVID-19 pandemic. Last month, the AHA said the industry has suffered from $323 billion in losses since the pandemic—with more likely to come in the latter half of 2020.
The AHA recently released eight case studies from a variety of hospital organizations—health systems, community hospitals, regional medical centers—on how COVID-19 has impacted them financially. The Queen’s Health Systems in Hawaii, for example, lost $127 million from March-May and is projected to lose $60 million in 2021. A potential worst-case scenario would see the system losing as much as $300 million loss if a second COVID-19 wave occurs.
Providence Health in the northwest region of the U.S. said it has posted a $538 million loss for the first half of 2020 and that net patient revenue declined $1.1 billion from the prior year. The losses were caused by a 23% decline in surgeries and procedures compared to 2019.
It’s fair to also note, thanks largely to funding from the Coronavirus Aid, Relief, and Economic Security Act, (CARES Act), not every hospital and health system is facing a financial disaster. HCA Healthcare made more than $1 billion in profit during the second quarter of 2020, this was a 37% increase from the same period in 2019. HCA not only received the money from the federal government, but also saw a massive uptick in outpatient procedures. Another for-profit health system, Tenet Healthcare posted a profit of $88 million in Q2, up $64 million year-over-year.
“Without a doubt, the financial support of the CARES Act provided an important bridge to minimize the financial crisis the pandemic created, allowing uninterrupted care for our patients and communities,” Tenet CEO Ron Rittenmeyer said in a statement.