The Pandemic One Year in: Providers Struggle with Loss of Revenue

A report by healthcare consultancy Kaufman Hall, done for the AHA in July, found that even before COVID-19 hit, some hospitals were coping with negative margins, and the median hospital margin was 3.5%. A January 2021 report from Kaufman Hall found that without CARES Act funding, the median hospital operating margin was down 4.9 percentage points. With the funding, it was down 1.2 percentage points. Meanwhile, more than 36 hospitals have gone into bankruptcy, according to an AHA fact sheet from November.

Roger B. Weems, vice president of advisory services at Premier, a group purchasing organization in Charlotte, North Carolina, that has branched out into healthcare analytics, says he has seen major differences in healthcare usage among providers. Although providers in certain geographic areas have placed elective surgeries on hold for months, others are almost back to pre-COVID-19 levels, he says. The lack of elective procedures “is the core financial challenge they are trying to recover from,” Weems says.

Going forward, there may be a shift in where care is delivered, Weems says. Some care that is currently provided on an inpatient basis might be done in an ambulatory care setting. “Many hospital systems have been contemplating it for a long time,” Weems says.

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