Congress can take action to help healthcare deal with 'crushing' financial challenges, AHA urges

With hospitals and health systems facing what it calls "crushing financial challenges," industry group the American Hospital Association is urging Congress to pass immediate legislation and take steps to ease such burdens.

In an Oct. 24 letter to political leaders, AHA president and CEO Richard Pollack highlighted certain areas where Congress can take action to help the healthcare system deal with the "unprecedented increased expenses" caused by supply chain disruptions, workforce shortages, labor and drug costs and diminished Medicare and Medicaid reimbursements. Such measures, if taken, could help mitigate issues such as the backlog in patient discharge, physician shortages and the imminent ending of certain waivers introduced to help deal with COVID-19 burdens. 

Targeted relief must also be focused on hospitals, the AHA urged. This includes extended aid to rural hospitals, new legislation to increase patient access to care and prevent additional financial cuts, as well as the creation of a metropolitan anchor hospital designation to help low income and vulnerable populations in cities.

The financial challenges are enormous, AHA said. The fixed nature of Medicare and Medicaid reimbursements, for example, means hospitals cannot "absorb or deflect the impact of historic inflation levels," according to the AHA letter. Such pressure means "inflation is having a devastating effect on hospitals' abilities to keep the lights on." 

In addition, labor costs even before the COVID-19 pandemic amounted to more than 50 percent of hospital expenses but, by the end of 2021, were 19.1 percent higher than pre-pandemic levels.

The AHA letter also highlighted a report from consulting group Kaufman Hall, which found that 2022 is expected to be the most financially difficult year for hospitals since the start of the pandemic. Total expenses are projected to increase by $135 billion in 2022 compared to 2021, and more than two-thirds of hospitals could be operating at a financial loss in 2022, according to the report.

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