As the number of COVID-19 patients in Wisconsin hospitals hit its highest levels of the calendar year this week, a new
analysis by Kaufman-Hall predicts that financial recovery for many hospitals is unlikely in 2021. The analysis, which includes actual hospital performance data for the first two quarters of 2021, indicates that hospitals are seeing more high-acuity patients, while facing increased costs for labor, drugs, services, personal protective equipment (PPE) and other supplies.
“Hospitals and health systems in Wisconsin are, and will continue to, care for their communities during these challenging times, as they have since the pandemic began over 18 months ago,” said WHA President and CEO Eric Borgerding. “However, this report highlights factors contributing to an underlying instability that is putting significant added strain on hospitals.”
The analysis indicates that demand for outpatient services at hospitals remains below pre-pandemic levels, which results in a loss of revenue. At the same time, hospitals are seeing sicker patients with longer inpatient lengths of stay, which contributes to the need for more resources. Those resources in turn are becoming more and more expensive.
Labor shortages have been a growing concern among Wisconsin hospitals and nationwide. The report notes that even though hospitals have improved on how efficiently labor resources are deployed, costs for labor are much higher. Other expenses are higher as well—drug costs are up 24%, supply expenses (such as for PPE) are up 17% and non-labor expenses are up 17%.
While a state-by-state analysis is not provided, the analysis concludes that hospitals nationwide are projected to lose an estimated $54 billion in net income in 2021. That’s after accounting for federal funding from the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Without those relief funds, hospitals would be facing losses of up to $92 billion.