News: COVID-19 surge threatens nonprofit hospitals’ financials

Nonprofit hospitals in COVID-19 hot spots are likely to see a negative impact to their financial margins, according to a report published by Fitch Ratings. In the midst of another surge of the disease, these hospitals are likely to see an influx in COVID-19 patients and will need to increase their spending on appropriate supplies and staffing, with the shortage of nurses causing a particular problem that is “expected to continue into 2022, and much longer,” the report said.

Additionally, the increase of COVID-19 cases are halting the return of elective procedures that could have aided in hospital margins. Nonprofit hospitals will also not be seeing any additional federal stimulus checks or other support, pushing their margins even lower.

According to the report, small and low-rated hospitals will be less able to fight rising expenses and declining reimbursement, meanwhile highly-rated hospitals “should have sufficient financial cushion to absorb an increase in operating costs and a shift in volume type without meaningfully affecting credit.”

Editor’s note: The Fitch Ratings report can be found here.