Hospital finances in 2021: 10 things to know

Lower patient volume, canceled elective procedures and higher expenses tied to the COVID-19 pandemic have created financial challenges for some hospitals, while others are seeing their finances begin to improve. 

10 things to know about hospital finances: 

1. The pandemic could cause U.S. hospitals to face between $53 billion and $122 billion in revenue loss this year, according to a study from healthcare consulting firm Kaufman Hall commissioned by the American Hospital Association. 

2. Under a scenario in which there is complete recovery of patient volume, quick vaccine progress and a sustained decline of COVID-19 cases, hospitals could lose $53 billion in revenue. This would include a $27 billion loss in outpatient revenue, $17 billion in inpatient revenue and $9 billion in emergency department revenue.

3. Under a scenario in which there is a partial recovery of patient volumes, slow vaccine progress and cyclical COVID-19 surges, hospitals could lose $122 billion. This would include $64 billion in lost outpatient revenue, $41 billion in lost inpatient revenue and $17 billion in lost emergency department revenue.

4. Last year, hospitals experienced increases in certain expenses, including those related to drugs, supplies and labor, and those expense pressures could continue this year, according to the Kaufman Hall report. 

5. Increased costs threaten the financial outlook for the hospital sector, and hospitals will face a challenging financial environment this year, according to reports by Fitch Ratings and Moody's Investors Service. 

6. Hospital operating margins fell nearly 27 percent between December 2020 and January 2021, according to Kaufman Hall. 

7. Many hospitals across the country took a financial hit from the COVID-19 pandemic, but some large health systems were still profitable in 2020. Their financial performance was fueled by several factors, including higher investment returns and higher-acuity patients. 

8. Several for-profit and nonprofit systems that have released their full-year 2020 results have reported net income of $1 billion or more. 

9. A variety of issues have put rural hospitals in a fragile financial position. Last year, 20 hospitals in rural communities closed, making 2020 a record year for rural hospital closures.

10. Rural hospitals could be offered some relief under the $1.9 trillion COVID-19 package President Joe Biden signed March 11. It provides $8.5 billion for rural healthcare providers. 

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