News: 2021 hospital revenues projected to fall as much as $122 billion

A forecast released Wednesday by the American Hospital Association and prepared by Kaufman, Hall & Associates, LLC (KH), reports that hospital revenues in 2021 are projected to fall between $53 billion and $122 billion from pre-pandemic levels, HealthLeaders reported.

The forecast projects that the pandemic-caused financial pressures on hospitals could slow vaccine administration, further fatigue exhausted frontline caregivers, and reduce care access, particularly in rural areas.

The KH report offers both best- and worst-case scenarios for hospital revenues. Under the "optimistic scenario," hospitals will lose $53 billion in 2021 with an assumption that patient volumes recover completely, vaccine administration goes smoothly, and the nation sees a decline in the number of COVID-19 cases.

Under the "pessimistic scenario," hospitals will bleed $122 billion in revenues if there is only a partial recovery in patient volumes, the vaccine rollout is bungled or delayed, and COVID-19 cycles through additional surges.

In addition to falling revenues, hospitals in 2021 will also likely bear additional costs for medicines and supplies, KH projects. The report notes that, when compared with 2019, drug expenses per adjusted discharge are up 17% as patients being admitted to hospitals and health systems increased in severity and required more therapeutics, including COVID-19 patients.

In addition, purchased service expenses per adjusted discharge are up 16% when compared with 2019, as hospitals required specialized functions such as environmental services and sterilizing facilities for COVID-19 patients. Labor expenses per adjusted discharge are also up 14% because of the increased use in contract labor, hazard pay, and other expenses for maintaining a workforce.

Supply expenses per adjusted discharge also is up 13% as hospitals scaled up their purchasing of PPE and other equipment to safely treat their patients. Shortages in 2020 increased the price for many of these items.

Editor’s note: This article was originally published by HealthLeaders. To read more of ACDIS’ coverage of COVID-19, click here.