AHA Predicts Billions of Losses in Revenue Due to COVID-19 in 2020

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AHA Predicts Billions of Losses in Revenue Due to COVID-19 in 2020

COVID-19 has been taking the country by storm. 

Wear a mask or not wear a mask? That is the question.

But the bigger qualm is that COVID-19 is significantly affecting our healthcare systems financially.

In fact, the American Hospital Association (AHA) is projecting hospital financial losses to deepen by an additional $120.5 billion from July 2020 through December 2020, bringing total losses to at least $323.1 billion for the year

It is estimated from the hospital association that it showed hospitals losing $202.6 between March 2020 and June 2020 due to coronavirus-related expenses. 

This includes COVID-19 hospitalizations, net revenue losses from canceled surgeries as well as other services. It also includes costs associated with purchasing personal protective equipment (PPE) and additional support for frontline workers.

Unfortunately, the latest financial projections are quite grim for hospitals as overall volumes continue to decline due to COVID-19.

In the newly published report, the AHA revealed survey responses from member hospitals on their current reductions in inpatient and outpatient volumes, as well as how quickly they expect to return to baseline patient volumes similar to 2019.

Member hospitals and health systems reported an average decline of 19.5 percent in inpatient volume and 34.5 percent in outpatient volumes relative to baseline levels.

Furthermore, the majority of respondents (67 percent) indicated that they did not think their organization would recover to baseline volumes by the end of 2020. Also, nearly 30 percent reported that it is unclear when their hospitals would return or that they never expected to return to baseline volume.

But even if hospitals and health systems reach baseline patient volumes by this time next year, the facilities are still poised to lose a total of $116.7 billion due to current reductions in inpatient and outcome visits. This estimate does not include the impact of currently increasing COVID-19 rates in some states or any possible future waves of the virus, AHA reported.

Additionally, the AHA’s projections did not include other costs hospitals are incurring during the pandemic, including drug acquisition and shortage expenses, wage and labor, uncompensated care costs, non-PPE medical supply and equipment expenditures, and capital costs. 

Given the COVID-19 pandemic,  spending in these areas has largely increased AHA explained.

“These losses put hospitals’ survival at serious risk,” the hospital association stated in the report.

Hospitals have been allocated a large piece of the $175 billion in emergency funds earmarked for healthcare providers through the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the Paycheck Protection Program and Health Care Enhancement Act.

Unfortunately, hospitals have only received approximately $54.6 billion of the $102.6 billion in CARES Act relief funds that have already been disbursed by HHS, the association reported. 

Also, the remainder of the relief funds may not necessarily go to hospitals considering the impact of COVID-19 as well as the CARES Act.

“Though significant, this amount represents just a fraction of the total financial losses already experienced by hospitals, and these losses are likely to grow,” the AHA wrote.

In April, the AHA requested top health officials to provide hospitals with $25,000 per bed to combat COVID-19. 

More recently, in response to a recent white paper authored by Senate Health, Education, Labor, and Pensions Committee Chairman Lamar Alexander (R-TN), the association called on Congress to provide at least $750 million a year in direct funding to hospitals and health systems. This would be provided through the Hospital Preparedness Program to create a permanent emergency fund to quickly give hospitals additional relief when needed.

The Federation of American Hospitals also recently urged Congress to provide additional financial support to hospitals through the Medicare Accelerated and Advance Payment Programs.

The repayment period is drawing closer for hospitals that took advantage of upfront reimbursements early on, with the earliest period starting August 1. 

At that time, CMS will keep Medicare fee-for-service payments to the hospitals until the upfront reimbursements are paid off.

CMS has yet to modify the terms of the programs, while Congress is still debating additional coronavirus stimulus packages, which could include more funding for hospitals.

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