Analysis: Hospital margins could fall to -11% if pandemic surges continue

July 29, 2020
Medicare Web

Half of all hospitals could be operating in the red in the second half of 2020 if they don’t receive additional government support, according to a recent analysis prepared for the American Hospital Association (AHA).

The analysis, prepared by Kaufman, Hall & Associates, found that hospital margins will likely be -3% for the second quarter of 2020, although that could have been as low as -15% without funding from the CARES Act. If there is a gradual, steady decline of novel coronavirus (COVID-19) cases, the median hospital margins could be -1% by the fourth quarter of 2020. However, if periodic surges continue to occur, the median hospital margin could drop to -11%.

It's not clear when hospitals can expect additional funding to help manage COVID-19. A relief bill passed by the House of Representatives in May included an additional $100 billion for healthcare providers. However, the outline of a relief bill recently unveiled in the Senate earmarks $25 billion for healthcare providers, although it includes liability protections for hospitals, nurses, and doctors.

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