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Why are hospitals losing money during a pandemic?
20 I Healthcare
Why are hospitals losing money during a pandemic?
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BY JASON DENONCOURT, CHEMICAL ENGINEERING 2023
DESIGN BY KAI GRAVEL-PUCILLO, ENVIRONMENTAL SCIENCE, 2022
With cases surpassing two million nationwide, hospitals and healthcare systems across the country have stepped up to meet the unprecedented challenges of COVID-19. Doctors, nurses, and other healthcare workers courageously serve those weakest while risking it all — reusing personal protective equipment (PPE), taking up additional shifts, and often living in hotels or garages in fear of infecting loved ones.
Despite often filling beyond capacity and providing thousands of tests daily, U.S. hospitals are losing an estimated $50.7 billion per month, according to the American Hospital Association (AHA). While hospital revenue has sharply declined since the start of the pandemic, hospital expenses have dramatically sky-rocketed.
As the pandemic spread, governors across the country quickly mandated the indefinite cancellation and delay of all elective operations and procedures. Though these swift actions improved public safety by preventing unnecessary contact while simultaneously preserving PPE, they’ve directly resulted in immediate and widespread financial distress among hospitals. Before the pandemic, many hospitals, particularly independent and rural hospitals, were already losing money. According to the AHA, about 23 percent of hospitals in the United States lost money in 2015. The pandemic has only exacerbated the financial fragility of hospitals caused by a flawed business model.
The financial success of most hospitals heavily relies on providing elective, well-reimbursed procedures, like orthopedic surgeries and radiological scans, to privately insured patients. Conversely, patients covered only by public insurance, like Medicare and Medicaid, cost hospitals $57.8 billion per non-pandemic year, according to the AHA. Furthermore, hospitals lose additional money by providing uncompensated care for those uninsured. Now, with nearly all healthcare resources committed to COVID-19 treatment, the business model of hospitals is evidently failing during these unprecedented times.
At-risk populations, primarily the eldery and people with underlying conditions, have significantly higher COVID-19 hospitalization rates. Minority groups face disproportionately higher rates of COVID-19 infection and death. In a recent Centers for Disease Control and Prevention (CDC) report, 33 percent of hospitalized patients were Black, compared to only 18 percent in the greater community. Ultimately, these groups are more likely to be on public insurance, like Medicaid, or uninsured. According to the CDC, Hispanics/ Latinxs are nearly three times more likely to be uninsured compared to white people and Black people nearly twice as likely compared to whites. These numbers present financial challenges for hospitals, as the surge in uninsured or underinsured Americans seeking medical attention applies yet another strain on the already fragile healthcare system.
With hospitals receiving less from public insurance than the cost of treatment and little to no money from the uninsured, hospitals are forced to take the financial burden as more are hospitalized. To put it in perspective, the Kaiser Family Foundation estimates the cost of treating a COVID-19 patient often exceeds $20,000. It can even extend up to $88,000 for patients that need ventilator support. Moreover, with unemployment rates nearing 15 percent as of April 2020, many American families have lost insurance provided by their companies, further increasing the amount of uncompensated care at hospitals. Compared to March of 2019, charity treatment has risen about 13 percent in 2020, according to a recent study from Kaufman Hall.
Though the cancellation of elective procedures has helped to preserve the limited supply of PPE, healthcare workers have still ultimately been forced to reuse N95 masks or resort to the lovingly-sewed, but less effective, homemade masks. The shortage of PPE spans the entire country. Even rural hospitals that have not seen a COVID-19 case face shortages and high prices. Gowns that cost 50 cents before the coronavirus pandemic fetched nearly $10 in peak shortage periods. Face shields costing $1.25 before the pandemic went for upwards of $25. These high prices and need for face coverings for all staff force hospitals to spend much more than budgeted for PPE.
As a result of lost revenue and rising expenses, hospitals must furlough or lay off the healthcare heroes in the midst of the pandemic. According to the US Labor Department, about 1.4 million healthcare workers lost their job in April of 2020. Furthermore, the cancellation of elective procedures at rural, independent hospitals, which have often seen very few COVID-19 cases but are burdened by rising expenses, is expected to push many perilously close to closing. Since 2010, 130 rural hospitals have closed across the country. These hospitals are critical for healthcare equity. With the pandemic only accelerating the closure of rural hospitals, some Americans could be forced to drive more than an hour to the nearest doctor, which would be catastrophic in cases of emergencies. With COVID-19 still an eminent threat in many parts of the country, this pandemic will continue to expose and exacerbate the issues of America’s fragile and inequitable healthcare system.
Morb Mortal Wkly Rep (2020). DOI: 10.15585/mmwr.mm6915e3
Healthcare I 21 Fewer visits, fewer diagnoses: How the decline in preventative care during the pandemic affects cancer patients
BY NATALIE MCGOWAN, BEHAVIORAL NEUROSCIENCE, 2021
At the start of the pandemic, the American Cancer Society recommended postponing non-essential cancer screenings to reduce the strain on the medical system. Because of these reduced screenings, cancer diagnoses have dropped since the first cases of COVID-19 were recorded. As the pandemic persists, understanding this drop in diagnoses is critical to ensure that doctors move forward in a way that balances the risks of the coronavirus with the importance of catching cancers early.
A study recently published in The Lancet: Oncology found that there was a decline in cancer cases in the Netherlands after the country’s first confirmed case of COVID-19. Diagnoses for all cancers, excluding skin cancers, had decreased by 26 percent, while those for skin cancers had decreased by 60 percent.
Similar findings have been seen in the U.S. An analysis by the Epic Health Research Network reported a nationwide drop in preventative cervical, colon, and breast cancers by 86 – 94 percent. The University of Pennsylvania Health System reported an 80 percent drop in skin cancer diagnoses.
The reasons for these declines are complex, as different barriers are seen at each level of clinical care. Patients may delay seeking care because they perceive their concern as nonurgent, do not want to strain the medical system for noncoronavirus-related issues, or have concerns about the risk of coronavirus transmission in the medical setting. Additionally, many annual visits are postponed, so patients may miss opportunities to be reminded of critical cancer screenings.
The rising use of telemedicine has also affected the number of cancer diagnoses. Providers conducting appointments via telehealth may be unable to investigate certain symptoms further, which could delay their ability to send referrals to specialists. Diagnostic evaluations may be delayed as hospitals need to allocate more resources to combating the coronavirus.
Many countries, including the Netherlands, have also paused national screening programs for breast, colorectal,
DESIGN BY KRISTI BUI, COMPUTER SCIENCE, 2021
and cervical cancer because of the increased strain on the health system. This level of clinical care has the broadest impact, as every patient and provider in the country is affected by policy change.
Whether these diagnostic delays end up changing the patient’s prognosis depends on the type of cancer. For example, for colorectal cancer, screening typically consists of a colonoscopy every 10 years, so a delay on the scale of months may not affect the prognosis for most patients. However, for more aggressive cancers such as inflammatory breast cancer, an early diagnosis can significantly improve outcomes. Similarly, invasive melanomas also should be diagnosed as early as possible, which makes the steep drop in skin cancer diagnoses particularly troubling.
Taking proper precautions during this pandemic is of the utmost importance, and delaying certain procedures may be necessary as hospitals brace for an increase in cases and ensure that they have enough resources to fight the disease. Additionally, existing cancer patients are especially vulnerable to the coronavirus, as many cancer treatments are immunosuppressive, so hospitals must allocate more resources to these patients as well.
As the U.S. begins to reopen, it is important to see whether these diagnostic trends change — will there be a compensatory increase in diagnoses compared to baseline, or will the diagnoses stay low? Furthermore, the potential impact on cancer mortality rates remains to be seen, and it will likely vary depending on the type of cancer.
However, as this epidemic threatens to become endemic, it is vital to understand how to best promote preventative care while also protecting patients from the coronavirus. To this end, it is important for patients and providers to discuss the risks and benefits of receiving cancer screenings as well as which screenings should and should not be delayed.
The Lancet: Oncology (2020). DOI: 10.1016/S1470-2045(20)30265-5 JAMA: The Journal of the American Medical Association (2020). DOI: 10.1001/ jama.2020.6236 The New England Journal of Medicine (2020). DOI: 10.1056/NEJMms2009984
