There is no doubt COVID-19 has brought uncertainty across all areas of life. From a rising unemployment rate to extended stay-at-home orders, American citizens are wondering how to prepare for the “new normal.” Hospitals and health systems are at the forefront of the combat against this pandemic including instilling a sense of security among the citizens. Increased testing and treatment efforts to contain the spread of the virus has become the biggest priority for all healthcare workers.
To handle the influx of patients while ensuring that hospital staff is safe and protected, the Center for Medicare and Medicaid Services made an announcement on March 18th, recommending the halt of elective procedures. Many patients are also choosing to avoid seeking medical treatment, even if they suffer from chronic illnesses, resulting in a drastic drop in patient visits.
A growing concern for hospital executives is the cost of treating COVID patients. Peterson-KFF’s Health System Tracker reports the cost of treatment for patients without the need for a ventilator could top $20,000. If a ventilator is needed, that cost rises to above $88,000 due to the increase in the average length of stay.
Other costs incurred by hospitals and health systems include increased labor costs and the cost of offering support to their employees. The high volume of patients requires more hospital staff to work at a given time while receiving overtime pay. Some hospitals have offered to aid their staff in childcare, travel expenses, and daily testing.
Accommodations made throughout hospitals in response to COVID-19 are causing an extreme financial impact. The Hospital and Health System Association of Philadelphia estimates a total loss of $10.2 billion over the course of the year. Compared to the financials of March 2019, Kauffman Hall reports a 13% decrease in the margin for March 2020 in the “National Hospital Flash Report” of April 2020.
The American Hospital Association (AHA) analyzed sets of data to predict the financial impact COVID-19 will have on hospitals and health systems for the four-month time period beginning March 1, 2020, to June 30, 2020. The resulting estimated costs totaled $202.6 billion. The AHA broke it down further into four subgroups and their contribution to the total are as follows:
- The net financial impact of COVID-19 on hospital costs is estimated to be $36.6 billion. This analysis considered the total number of patients hospitalized due to COVID-19 over a four-month period, the cost of hospitalization, and how much payers are expected to reimburse the providers for hospitalizations due to COVID-19.
- Total revenue losses from canceled surgeries and other services are estimated to be $161.4 billion. The AHA classified the 2018 Medicare claims used to calculate the total revenue losses from canceled surgeries and other services (along with the 2018 AHA Annual Survey Database) into emergency department (ED)-related, non-ED related medical and non-ED related surgical services. Three levels of service interruptions were identified and scaled to a four-month impact.
- The additional costs associated with purchasing needed PPE is estimated to be $2.4 billion. Taking into consideration the increased amount needed and increased cost of personal protection equipment (PPE), the AHA calculated the price difference and applied it to the number of beds across the United States.
- The costs of the additional support some hospitals are providing to their workers are estimated to be $2.2 billion. The cost of childcare, housing, transportation, and COVID-19 screening and treatment for the top 100 counties with the highest rate of COVID-19 infections were combined to estimate the total cost of support.
There have been government efforts to offset the financial impact, including the $100 billion from the Provider Relief Fund and $75 million from the Paycheck Protection Program and Healthcare Enhancement Act. Depending on the length and impact of COVID-19, more government support may be required.