Report: U.S. Hospitals Could Sustain $54 Billion Net Income Loss for 2021

By Jonathan Springston, Editor, Relias Media

U.S. hospitals could lose $54 billion in net income over the course of 2021, with one-third of facilities operating on negative margins for the rest of this year, according to new estimates from the consulting firm Kaufman Hall.

The report authors attributed this financial disaster to three issues: sicker patients, higher expenses, and fewer outpatient visits. It is not just the never-ending COVID-19 pandemic causing capacity problems; there are many patients presenting today with conditions that require extra treatment and longer stays — primarily because these patients put off routine care during the pandemic, which only exacerbated untreated and undiagnosed underlying health problems.

“The median length of stay is up 8% year to date compared to 2019 for most hospitals (indicating higher-acuity patients), and up as high as 18% for some hospitals with 500 beds or more,” the report authors wrote.

Concurrently, there are fewer outpatient visits, which typically produce higher margins and are less expensive to treat. The report authors indicated outpatient revenue actually is up slightly vs. this time in 2019, but the flood of inpatient cases and associated costs are negating potential gains.

Finally, the cost of seemingly everything is higher today than pre-pandemic. As noted, it is more expensive to treat higher acuity inpatient cases, and the latest COVID-19 wave is not helping matters. Plus, administrators are dealing with staff shortages, hazard pay, and fluctuating labor costs.

“Total expenses per adjusted discharge, which approximates the amount of hospital expenses necessary to care for a patient in the inpatient or outpatient setting, are up 15% compared to before the pandemic for hospitals nationwide,” the report authors wrote. “Non-labor expenses per adjusted discharge are up 17% and labor expenses per adjusted discharge are up 14% … Drug costs have seen the largest increases, with drug expenses per adjusted discharge up 24% compared to before the pandemic.”

The upcoming November issue of ED Management includes a detailed story on a recently released investigation of just how dangerous this situation is. Researchers studied data from 558 U.S. hospitals that was collected between March and August 2020. They estimated nearly one in four COVID-19 deaths was potentially attributable to hospitals strained by surging caseloads.

The authors noted practice changes that have occurred during the hardest parts of the pandemic lead to medication errors, provider fatigue, a higher bar to hospitalize, an earlier trigger to comfort care, clinicians practicing outside their specialties, and secondary impacts on patients with non-COVID-19 illnesses.

“Our data raise the question of whether there may be a role for earlier diversion of patients with COVID-19 from emergency departments of hospitals experiencing surges,” the authors wrote. “Pre-emptive engagement of relief healthcare (‘shock absorber’) facilities is already occurring. Medical operations coordination cells are enabling these triage efforts to cross state lines, especially when neighboring hospitals are also experiencing surges. However, the risks and benefits of transporting patients with COVID-19 must be carefully studied and calibrated to individual hospitals' capacity, infrastructure, and resources.”

For more Relias Media coverage of the COVID-19 pandemic, please click here.