The financial impact of COVID-19 on hospitals and health systems may top $200 billion from March through June, according to a report released Tuesday.
More than $161 billion of the expected revenue losses stems from canceled surgeries and other services like lower levels of outpatient treatment and emergency department services. COVID-19 related hospitalizations account for an additional $37 billion in losses, the American Hospital Association reports.
The extra costs associated with purchasing additional personal protective equipment add another $2.4 billion to the tab, while extra support for front-line workers will cost hospitals and health systems $2.2 billion. The added supports include helping workers with childcare, housing, transportation and COVID-19 screening and treatment.
“Hospitals will likely continue to see lower service use while treating COVID-19 patients beyond June 30, which would result in continued financial pressures,” AHA said in a statement.
Hospitals are asking Congress for more bailout money to help them deal with the financial impact of the pandemic. They’ve been dissatisfied with how the federal government has paid out the existing relief funds, which they say haven’t been well-targeted or timely.
AHA’s estimates don’t account for costs associated with drug shortages, wages and labor, non-PPE medical supplies and equipment or capital expenditures because there aren’t enough available data.
“The totality of these costs combined with the uncertainty of the pandemic’s duration is certain to imperil hospital finances,” the report said.
Drug supply chains have been ravaged by the COVID-19 outbreak, which has driven up the costs of treating patients. Additionally, hospitals have had to pay more for overtime or outsource their staffing needs to outside firms to deal with an acute shortage of healthcare workers.
On top of that, hospitals have boosted spending on non-PPE medical supplies and equipment like ventilators “in anticipation of a surge of COVID-19 patients,” AHA said. They’ve also shelled out huge sums to expand their treatment capacity with testing tents and intensive care unit beds, among other things.
The estimated net financial impact of COVID-19 hospitalizations is based on the total number of COVID-19 hospitalizations from March 1 to June 30, the added costs of a COVID-19 hospitalization and the anticipated reimbursement for COVID-19 hospitalization from both commercial and public insurers. AHA did not consider changes in payer mix that will likely result from many people losing their employer-based coverage.
In addition, AHA believes that the losses from canceled surgeries and other surgeries will probably exceed its estimate because there’s a lot of uncertainty about how and when different states will lift their restrictions on elective procedures.
The report also claims that the estimated costs of providing additional supports to front-line workers are conservative because the AHA assumed that just 50% of hospitals and health systems in so-called COVID-19 “hotspots” would deliver such benefits.