Struggling hospitals close due to “financial challenges” from the coronavirus outbreak

The Wuhan coronavirus (COVID-19) pandemic looks to claim some unlikely victims – hospitals. In a new report, the American Hospital Association (AHA) warned that hospitals and healthcare systems “face catastrophic financial challenges” in the midst of the ongoing pandemic.

The report says that the increased cost of COVID-19 hospitalizations for hospitals, losses from services canceled because of the pandemic, as well as costs for purchasing personal protective equipment and additional support for their employees, are hospitals’ main financial burdens.

Hospitals were already under strain before the coronavirus hit

According to the AHA report, the ongoing coronavirus pandemic has created a cash crunch for many hospitals. These facilities are expected to lose more than $200 million between March 1 and June 30 – an average of $50.7 billion per month. Non-federal hospitals are expected to lose approximately $161.4 billion in revenue during those four months due to canceled services, such as non-elective surgeries and outpatient treatment.

The report also pointed out that while the federal government moved quickly to provide financial assistance to hospitals during the pandemic, many of these facilities already had existing financial pressures before 2020.

“Critics have argued that hospitals were well funded prior to the COVID-19 public health emergency, however, the reality is that many hospitals were already facing financial pressures,” stated the report.

In addition, the report also pointed out that only a portion of the relief funds was going to hospitals as other providers were also getting them.

“Other providers – such as physicians and other clinicians, laboratory and testing facilities, and durable medical equipment providers – are drawing down from health care provider relief funds as well,” the report explained. “Hospitals and health systems will need more funds to treat patients, save lives, and get America back on its feet.”

42 hospitals have closed

According to Becker’s Hospital CFO Report, 42 hospitals have closed this year after their provider organizations filed for bankruptcy.

The closures include university-linked hospitals, such as the University of Pittsburgh Medical Center Susquehanna Sunbury hospital, as well as facilities owned by large health systems, such as the Mayo Clinic Health System’s hospital in Springfield, Minnesota.

Notably, a number of the now-closed hospitals were already considering closing, even before the coronavirus pandemic hit.

Mayo announced plans to close its Springfield hospital in early December. Back then, regional vice president Dr. James Hebl said that the facility faced staffing challenges on top of dwindling patient volumes.

Others had their financial troubles greatly amplified by the pandemic, leading to their closures. The Williamson Hospital in West Virginia is one example: While the hospital had filed for Chapter 11 bankruptcy last October, it had been able to continue to operate on thin margins for months. The pandemic, however, caused the 76-bed hospital’s patient volume to decline as people opted to stay home for fear of getting infected.

More trouble to come

The 42 hospitals may not be the only ones to close within the next few months. According to Moody’s Investors Service, the sharp declines in revenue and cash flow caused by the suspension of elective procedures due to the pandemic could cause more hospitals to default on their credit agreements this year, compared to 2019.

The closures come at a time when many healthcare systems around the country are facing challenges from mounting COVID-19 cases.

In Texas’s Harris County, officials are warning that they could run out of intensive-care beds in two weeks. In addition, officials also estimate that they’ll run out of surge beds in 38 days.

Texas Children’s Hospital, located in the county’s largest city of Houston, started admitting adult patients, as other facilities, including the Texas Medical Center – the country’s largest medical facility – run out of beds. (Related: Texas sees record coronavirus hospitalizations after early reopening.)

Learn more about the coronavirus and its effects on healthcare by following Pandemic.news.

Sources include:

ZeroHedge.com

BeckersHospitalReview.com 1

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