Federal subsidies kept COVID-strapped hospitals financially stable in 2020, first year of pandemic

Subsidies from the federal authorities stored hospitals throughout the U.S. afloat in the course of the first yr of the COVID-19 pandemic, successfully defraying earnings loss even for probably the most susceptible medical facilities, researchers from the Johns Hopkins Bloomberg Faculty of Public Well being report in a brand new examine.

The examine, printed Could 13, 2022 in JAMA Well being Discussion board, is likely one of the first investigations into how billions in U.S. authorities subsidies affected the monetary viability of hospitals throughout this public well being disaster—information that would assist policymakers determine whether or not and how you can difficulty future subsidies throughout this pandemic or others which will come up.

For his or her evaluation, the researchers in contrast hospital working and revenue margins at 1,378 U.S. hospitals from the three years previous the pandemic—January 2016 to December of 2019—to the primary yr of the pandemic—January to December 2020. The researchers used CMS Hospital Value Studies for hospitals’ general revenue margin (the quantity earned from all earnings sources) and working margin (the quantity earned particularly from affected person care).

The examine discovered that in pre-pandemic interval, hospitals general misplaced a mean of $1 for each $100 earned from affected person care actions, resulting in an working margin of unfavourable 1 p.c. In 2020, that quantity dropped to between $7 and $8 misplaced per each $100 earned, an working margin of unfavourable 7.4 p.c.

For presidency, rural, and smaller hospitals, which regularly function on the sting of economic viability, the typical general revenue margin stayed secure or improved in the course of the first yr of the pandemic on account of COVID-19-related subsidies. From 2019 to 2020, the typical general revenue margin elevated from:

• 3.7 p.c to 7.2 p.c for presidency hospitals
• 1.9 p.c to 7.5 p.c for rural hospitals
• 3.5 p.c to six.7 for small hospitals.

“Hospital operations had been actually hit onerous in the course of the pandemic. Our examine reveals that the reduction funds offered an essential lifeline to maintain financially weak hospitals up and operating,” says Ge Bai, Ph.D., CPA, a professor within the Bloomberg Faculty’s Division of Well being Coverage and Administration. She can also be a professor of accounting on the Johns Hopkins Carey Enterprise Faculty.

When COVID-19 gained traction within the U.S. in early 2020, hospital operations modified considerably. Sufferers usually deferred elective procedures and appointments that weren’t pressing, and lots of hospitals needed to restructure their amenities to deal with an inflow of sufferers with COVID-19, a good portion of whom had been uninsured.

Throughout the public well being emergency, the federal authorities offered $175 billion in subsidies to hospitals throughout the nation, largely by the Supplier Reduction Fund and the COVID-19 Uninsured Program.

“Hospitals that are inclined to serve socioeconomically deprived sufferers and extra who’re uninsured are probably the most susceptible to monetary losses,” says first writer Yang Wang, Ph.D., a doctoral pupil within the Bloomberg Faculty’s Division of Well being Coverage and Administration. “However the additional federal funding helped them keep operational.”

“COVID-19 and Hospital Monetary Viability within the U.S.” was co-authored by Yang Wang, Ge Bai, and Gerard Anderson.