Academic hospital finances pummeled by COVID-19: 3 unique challenges

Similar to their university partners, academic medical centers are facing unprecedented financial hardship during the COVID-19 pandemic, in part due to bans on elective procedures and treating high-cost patients. 

While for-profit and nonprofit hospitals nationwide are facing significant financial challenges related to COVID-19, AMCs have unique challenges of their own. Here are three: 

1. AMC finances are often intertwined with their affiliated medical schools. Janis Orlowski, MD, chief healthcare officer at the Association of American Medical Colleges, told Inside Higher Ed, "Many hospitals that have schools of medicine or universities that they work with have what is called a 'funds flow' to essentially provide support for the educational research mission." Because universities are also struggling financially right now, some AMCs could face increased financial pressure.

2. AMCs and their universities also recruit faculty together. This relationship further complicates finances, as exact financial arrangements vary at each institution. These unique relationships make it difficult to predict how a university's finances could affect its hospital affiliate, Ken Rodgers, director at S&P Global, told Insider Higher Ed.

3. AMCs see a disproportionate number of COVID-19 patients, which require intense treatment that is costly to administer. Institutions like Indianapolis-based Indiana University Health "are generally well equipped to take on the most complex and most sick patients, and so as we have COVID-19 patients that are really ill and need to be on ventilators, we have more capacity in our academic health center to care for those patients," IU Health CFO Jennifer Alvey told Inside Higher Ed. The financial toll of high-cost patients, paired with elective procedure bans, is stark: IU Health saw its first-quarter operating income drop 50 percent this year compared to last year.

More articles on healthcare finance:
More than $1B in bailout funds go to CHS, HCA and UHS
214-bed Kentucky hospital closes
Cash crunch from COVID-19 could force 100 hospitals to close


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