July 2020
National Hospital Flash Report
Based on June Data from Over 800 Hospitals
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Dear Readers,
Recently Kaufman Hall published a report, supported by the AHA, demonstrating the impact that COVID-19 has had on hospital finances as well as some projections for future recovery. Please read the report here. In this month’s issue of the National Hospital Flash Report, we present findings that are consistent with this report and support the notion that more relief funds are required for our nation’s hospitals.
The COVID-19 pandemic has created a highly volatile operating environment for the nation’s hospitals and health systems. In March, April, and May there was an unprecedented drop in volumes resulting in a massive loss of revenue. In June, margins approached their historical rate primarily driven by the pent-up demand of elective volume--resulting from consumers sheltering-in-place—which many organizations began to resume in June. While this momentary surge in volume has been beneficial for some organizations in June, it’s important to note that it doesn’t come close to making up for the lost volume and revenue that has occurred since March and dipping the lowest in April. Even when including the CARES Act relief, the year-to-date median hospital operating margin is still 200-300bps below historical and sustainable performance. Additionally, in this report we highlight the increased spread in performance, whereby some hospitals and organizations are closing or on the brink of bankruptcy, while others are weathering the storm.
The recent rise of COVID-19 cases in the United States is a worrying sign, and should this resurgence of cases continue, the performance of organizations may fall close to or below the worst-case scenario of the projections presented. As the Fall and Winter approach, we may see an incredibly challenging environment for our hospitals if COVID cases surge alongside seasonal illnesses and force states and communities to lock-down once again.
Given the challenges outlined in the Kaufman Hall/AHA report and this month’s National Hospital Flash Report, it is critical that our country works to pass additional legislation to help our providers and institutions during this time at which it is most critical. In addition to supporting our nation’s caregivers, additional funding would help support the economy thus benefiting both the health and financial wellbeing of our citizens. We continue to stand with our providers and will continue to monitor the performance in upcoming months. Thanks,
Jim Blake Managing Director and Publisher
Kaufman Hall
See Kaufman Hall’s Coronavirus page for regular updates.
©2020 Kaufman, Hall & Associates, LLC
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National Hospital Flash Report
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