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Hospital Operating Margins Dropped When The COVID-19 Pandemic Began

There’s no doubt that since COVID-19 began that it has changed things. 

The financial and economic damage that this pandemic has caused is devastating. 

Hospitals and healthcare providers are suffering the most in this situation. 

In fact, it has been reported that more than 800 hospitals in the US have faced a huge decline in hospital operating margins. 

While patient volumes definitely took a hit, it’s only fair to expect the earning and tax operating margins have declined greatly. 

During this time, the whole country is relying greatly on its healthcare system, hospitals and clinics nationwide are facing a huge financial crisis due to COVID-19. 

Because the pandemic calls for immediate attention, hospitals invested heavily in employing staff, doctors, specialists, acquiring supplies, and expanding living capacity. 

Labor and non-labor expenses have increased by 1%.  And all in all, these numbers are just a result of the 2-week response to the pandemic. 

While the US had its first confirmed case back in January, it was March when the US faced an exponential rise in the number of confirmed cases. 

The CDC reported that around March 1st, only 30 cases of COVID-19 had been reported. The number dramatically shot up to more than 160,000 confirmed cases by the end of March. 

Because of the sudden spike in the number of cases, the hospitals had to prepare accordingly. This meant prioritizing the most vulnerable cases. 

Hospitals had to keep up and provide for all confirmed COVID-19 cases with equal care and attention. This suddenly became a difficult thing to achieve, as this meant facilitating such cases differently. 

Hospitals also noticed a huge difference in the number of discharged patients per year. 

Since the pandemic required everyone to stay in their homes, all confirmed cases were given 14 days to stay in quarantine at the hospital. 

Exceptional cases were given priority here. The number of emergency visits done yearly also took a huge hit as people feared exposure to the virus and stayed at home. 

Low numbers mean low revenue. 

Compared to the past few months, March 2020 saw a huge drop in revenue production. Same time, last year was quite different for hospitals as budgets were matched with expectations. 

Due to the pandemic, hospitals also had to invest a lot more in finding supplies, equipment, and staff to take care of patients. These expenses significantly increase even if patients weren’t coming in. 

The reason behind the spike is that hospitals had to cover the patients regardless of how many doctors they had on board. 

The chances of the frontline caregiver catching the virus were significantly higher than the staff behind the lines. In case the doctor on the frontline was infected, additional staff was employed to cover their place. 

A more dramatic change is expected in the months to come as the COVID-19 period isn’t going to end anytime soon. 

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