Hospitals face financial fallout from COVID-19: 6 things to know

From skyrocketing treatment expenses to loss of revenue from canceled procedures, the COVID-19 pandemic is putting pressure on hospitals and health systems across the U.S.

Six things to know:

1. Financial pressures. The COVID-19 outbreak is expected to have a significant impact on hospitals in the near term. Much of the pressure is due to hospitals canceling profitable elective procedures to perform lower profit treatments for patients with COVID-19, Rhett Brown, lead healthcare research analyst at Lazard Asset Management, told The Bond Buyer. Large hospitals and health systems are better positioned to withstand the stress on the balance sheet, George Huang, senior analyst at Wells Fargo, told The Bond Buyer.

2. Outlook negative. Credit rating agencies say the outlook for nonprofit and for-profit hospitals is negative. In addition to the revenue lost from canceling elective procedures, many hospitals will also see costs rise as they pay more overtime, hire contract workers and pay higher prices for supplies from vendors. Read more about Moody's Investors Services' outlook for the nonprofit hospital sector here. Read more about the outlook for the for-profit hospital sector here.

3. Rural hospitals. Before the COVID-19 outbreak in the U.S., many rural hospitals across the nation were already facing financial challenges, causing some to scale back services and others to close. More than 125 rural hospitals have closed since 2010, and the pandemic may force many more rural facilities across the country to shut down. "If we're not able to address the short-term cash needs of rural hospitals, we're going to see hundreds of rural hospitals close before this crisis ends," Alan Morgan, head of the National Rural Health Association, told Kaiser Health News.

4. Safety-net hospitals. Cash on hand is critical during the COVID-19 outbreak, which is a challenge for many rural and safety-net hospitals. America's Essential Hospitals, an industry trade group representing 300 hospitals nationwide that serve large numbers of uninsured, Medicaid and Medicare patients, is urging Congress to take action to offset the financial impact of COVID-19 on safety-net hospitals.

5. $100B in emergency funding. Groups representing hospitals, physicians and nurses asked Congress March 19 for $100 billion in funding to offset losses tied to the COVID-19 pandemic. In a letter to Congressional leaders, the American Hospital Association, American Medical Association and American Nurses Association said the funding is needed to help overcome supply shortages, staffing shortages and financial challenges that hospitals and other providers are facing due to COVID-19.

6. ACOs expect losses. ACOs and hospitals and physicians that participate in other value-based payment models are seeking to avoid the expected financial losses caused by the COVID-19 pandemic. In a March 18 letter to House leaders, 10 trade groups representing hospitals, physicians and ACOs urged Congress to preclude the financial impact or shared loss repayment for all ACOs and other value-based program participants based on costs accrued related to COVID-19 care.

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