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AHA Report Highlights Financial Fallout from COVID-19

February 24, 2021

A report released today from the American Hospital Association (AHA) outlines the damaging financial impact the COVID-19 pandemic has had on hospitals and the continued pressures they will face during 2021.

The report, prepared by Kaufman, Hall & Associates, LLC, highlights the critical need for additional support to ensure hospitals are able to care for their communities. During 2021, hospital revenues could decline between $53 billion and $122 billion from pre-pandemic levels, the report notes.

“When we talk about the historic financial challenges hospitals face, it’s about more than dollars and cents, it’s really about making sure hospitals and health systems have the resources needed to provide essential services for their patients and communities,” Rick Pollack, AHA president and CEO, said in a statement.

The report’s key findings include:

  • Hospital revenue losses could range from $53 billion to $122 billion from pre-pandemic levels. Three key factors—patient volume, COVID-19 vaccine delivery, and overall COVID-19 cases—will determine the degree of financial fallout during 2021
  • Drug expenses per adjusted discharge increased 17 percent during 2020, as patients needed additional therapeutics to manage their care
  • Purchased service expenses per adjusted discharge increased 16 percent due to the need for additional environmental services and sterilization to maintain safe spaces
  • Labor expenses per adjusted discharge increased 14 percent
  • Supply expenses per adjusted discharge increased 13 percent for personal protective equipment (PPE) and other equipment to safely treat patients

Even before COVID-19, America’s hospitals were facing significant financial challenges, including “downward revenue pressure from both government and commercial payors, resulting in a very thin 2.5 percent median margin in 2019,” the report notes.

The analysis follows other recent reports evaluating the pandemic’s financial toll on Pennsylvania’s hospitals and health systems, including a report last month from the Pennsylvania Health Care Cost Containment Council. An analysis commissioned by HAP and prepared by Health Management Associates (HMA), outlined the significant financial consequences affecting the hospital community through the end of July, 2020.

HAP continues to advocate for sufficient financial resources at the state and federal level to allow hospitals to fulfill their critical mission during the pandemic and beyond. During 2021, hospitals will need significant support and resources as they deliver outstanding care and administer the COVID-19 vaccine to patients across the commonwealth.

For more information, contact Laura Stevens Kent, HAP’s senior vice president, strategic integration; Jeff Bechtel, HAP’s senior vice president, health economics and policy; or Warren Kampf, HAP’s senior vice president, advocacy and external affairs.