2022 the most financially difficult year for hospitals, health systems since start of pandemic

A new analysis from management consulting firm Kaufman, Hall & Associates indicates hospitals and health systems continue to face intense pressure on staff and resources while also dealing with rising expenses for supplies, drugs and equipment, and the workforce, according to a Sept. 15 special bulletin from the American Hospital Association.

These trends are expected to continue through 2022, with hospitals and health systems losing billions of dollars. Left unaddressed, these challenges can jeopardize access to essential healthcare services for patients, according to the bulletin. 

Challenges in the first half of 2022 tested healthcare organizations with the impact of COVID-19 surges, increased expenses, and a lack of relief funding for economically struggling institutions. 

As a result, the most optimistic projections for 2022 indicate margins will be down 37 percent compared to pre-pandemic levels. More than half of hospitals are operating in the red, according to Kaufman, Hall & Associates, and forecasts for the remainder of 2022 indicate that margins could be down by 133 percent compared to pre-pandemic levels. More than half of hospitals — 53 percent — are projected to have negative margins for the rest of the year.

Furthermore, over two-thirds of hospitals are forecast to operate in the red, with expenses projected to increase throughout 2022, leading to an increase of $135 billion over 2021. Labor expenses are projected to increase by $86 billion, while non-labor expenses are projected to increase by $49 billion.

American Hospital Association President and CEO Rick Pollack said that although federal support and relief have tapered off, the fight against COVID-19 has not. 

"These realities translate into access to services being put in jeopardy. This deserves the immediate attention of policymakers at every level of government to ensure we are able to keep people healthy and maintain essential public services that our communities depend on. America simply can’t be strong without its hospitals being strong," said Mr. Pollack

 

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