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

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.