Rural, Smaller Hospitals Relied Heavily On Covid Relief To Survive, Study Suggests

Topline

More than $170 billion in Covid-19 relief funds the federal government allotted to struggling hospitals during the pandemic helped healthcare facilities stay afloat by offsetting major financial losses due to the coronavirus, a new study from the Johns Hopkins Bloomberg School of Public Health found.

Key Facts

The $175 billion in subsidies provided to hospitals and other healthcare facilities through the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Paycheck Protection Program and Health Care Enhancement Act allowed the facilities to maintain similar profits to years before the pandemic, the study, published in JAMA Health Forum on Friday, showed.

The study—which compared operating and profit margins from 2016 to 2019 at over 1,300 hospitals across the country to margins during the first year of the pandemic—found that hospitals lost an average of $7 to $8 for every $100 earned from patient care in 2020, compared to $1 for every $100 earned in the years prior to the Covid-19 outbreak.

Despite these losses, from 2019 to 2020, some of the most vulnerable healthcare facilities—government, rural and smaller hospitals—saw increased profit margins compared to the years before the pandemic with the help of the CARES money, researchers found.

Covid-19 relief funds provided a “lifeline” to keep financially struggling hospitals up and running, Ge Bai, an author of the study and professor at the Bloomberg School’s Department of Health Policy and Management, said in a statement.

Big Number

$54 billion. That’s how much income hospitals nationwide were expected to lose in 2021, even while taking into account CARES funding, according to estimates from Kaufman Hall, a healthcare consultancy group.

Key Background

Hospitals took significant financial hits as a result of the Covid-19 pandemic as they were forced to delay more lucrative, elective procedures and appointments while taking on new costs to treat a flood of patients infected by the coronavirus, many of whom were uninsured. Small, rural hospitals—many of which were struggling financially before the pandemic—often experienced the most severe financial impacts as they care for a disproportionate number of patients covered by Medicaid, Medicare or the Children’s Health Insurance Program. Congress in 2020 approved $175 billion in emergency funding to help healthcare facilities recoup losses tied to the pandemic. The John Hopkins study is one of the first investigations into how that money affected hospital operations during the Covid crisis.

Further Reading

Hospitals in less-vaccinated areas are struggling financially as infections mount and stimulus runs out (Washington Post)