Hospital Revenue Losses Projected to Remain High in 2021 Jeopardizing Access to Care, AHA Says
- February 26, 2021
Hospitals could see total revenue losses between $53 billion and $122 billion this year as a result of the COVID-19 pandemic, according to a new analysis released by the American Hospital Association (AHA).
The analysis, prepared by Kaufman, Hall & Associates, LLC, said the range of projected revenue losses over the next year depends on how quickly pre-COVID-19 patient volumes and revenue return, vaccine progress, and the extent COVID-19 cases decline or surge.
The analysis notes that hospitals in 2020 faced increases in expenses due to COVID-19, which are expected to continue into 2021. The greatest increases in expenses over pre-pandemic levels were for drugs (17%); purchased services like environmental services and sterilization (16%); labor expenses (14%) for contractors and hazard pay; and supplies (13%) such as personal protective equipment and because of price increases triggered by shortages.
“Whether recovery from COVID-19 in 2021 is relatively rapid or relatively slow, America’s hospitals will face another year of struggle to regain their financial health while providing necessary care and services to a nation that is continuing to experience the effects of an unprecedented pandemic,” the analysis concluded.
AHA previously released reports projecting that hospitals would lose at least $323.1 billion through the end of 2020.
In a press release, AHA said the sustained financial woes hospitals are facing could slow down vaccine distribution and administration and diminish access to care, including in rural areas.
“When we talk about the historic financial challenges hospitals face, it’s about more than dollars and cents, it’s really about making sure hospitals and health systems have the resources needed to provide essential services for their patients and communities,” said Rick Pollack, AHA President and CEO.
AHA and eight other organizations are urging Congress to include additional federal aid for providers in the next stimulus legislation. Democrats are working to advance President Biden’s proposed $1.9 trillion stimulus package through reconciliation.
In a February 25 letter to Senate Majority Leader Chuck Schumer (D-NY) and Minority Leader Mitch McConnell (R-KY), the groups said health care providers need additional funding in the next reconciliation package.
Congress last year allocated $178 billion to providers through the Provider Relief Fund, the groups noted. “To date, the bulk of this funding has either been distributed or allocated for payments to account for losses incurred into the first quarter of this year,” the groups said.
“Our hospitals and health systems remain committed to caring for patients throughout the pandemic. But we need additional funding to both participate in the vaccination efforts as well as care for large numbers of critically ill patients, maintain sufficient staffing and continue to acquire enough personal protective equipment and other resources necessary to do this critical work,” the groups said.
The letter was signed by America’s Essential Hospitals, AHA, the Association of American Medical Colleges, Catholic Health Association of the United States, Children’s Hospital Association, the Federation of American Hospitals, the National Association for Behavioral Healthcare, Premier healthcare alliance, and Vizient, Inc.