In areas where the coronavirus is rampant, like New York City, New Jersey and New Orleans, hospitals have been overwhelmed with patients and have had to stop most non-COVID activity to respond to the urgent demands of infected patients. As a result, health care organizations are experiencing a significant reduction in revenue, while at the same time seeing increased staff and supply costs. They are also facing the likely possibility of an increase in uncompensated care as more people who have lost their jobs will be unable to pay. In addition, hospitals are not likely to see ongoing contributions from non-operating revenue, as their investment portfolios have been hurt as well.
The big unknown is how long this will last. Projections for the epidemiologic trajectory of the coronavirus are still uncertain, but it is reasonable to estimate that we should be prepared for a long period of operational reductions.
Even with this additional federal stimulus funding now on its way, government funding can’t be the only solution to the industry’s problems. Hospitals are going to have to look to do business differently, and many will have to re-forecast their budgets and make tough choices. Managed care companies that have been seeing reduced claims as a result of the delay and reduction of services will have to step in by providing additional financial help to providers. Medicaid programs too will need to contribute to reducing provider financial losses.
Once this public health crisis is over, getting the economy back on track will be essential, but bolstering our health care system will be just as critical. While saving our airlines and hospitality industry is important, we must not overlook the industry that will get us out of this crisis and future crises: the health care industry.