Report: Hospitals facing massive losses on coronavirus cases

March 25, 2020

Researchers say a 35 percent increase in coronavirus reimbursements may stem the devastation.

A new report projects big losses for hospitals treating the victims of the COVID-19 coronavirus pandemic.

The report, from Strata Decision Technology, projects a worst-case scenario where 97 percent of hospitals lose an average of $2,800 per case and many losing between $8,000 and $10,000. This scenario relies on the federal government failing to raise the reimbursement premium on COVID-19 patients.

It also examined a case where Congress increased these reimbursement premiums by 20 percent, and found an average loss of about $1,200 per case and up to between $6,000 and $8,000 for some hospitals depending on their payer mix.

The increased loss in these models are due to the increased costs of treating COVID-19 patients compared to their diagnosis-related group, according to the report.

“The complexity of the patients is causing a decline in nurse staffing ratios as nurses and staff are required to help each other validate that their personal protective equipment (PPE) is properly fitted,” the report says. “Costs are also higher due to expanded cleaning regimens, PPE shortages, more frequent X-rays and CT scans, and overall higher supply and drug costs.”

Compounding the issue is the loss of revenue due to stoppage of the elective inpatient services which are primary sources of revenue for hospitals.  The researchers estimate that 90 percent of hospitals which cancel these services will shortly begin to see negative profit margins from COVID-19 coronavirus patients, the report says.

The researchers warn that, even with a 20 percent bump in COVID-19 reimbursements, many hospitals will not be able to survive the lack of cashflow for more than 60 to 90 days leading to decisive actions on reducing costs by firing or furloughing large numbers of workers who are currently converting hospital beds, maintaining equipment, and performing non-clinical but essential tasks.

For this reason, the researchers are calling for Congress to increase Medicare reimbursements for COVID-19 care by 35 percent as a preliminary measure, but even that would not solve the broader issue.

“If the pandemic and correlated loss of elective cases continues into the Fall of 2020, increased reimbursement would need to come from commercial payers and Medicaid as well as Medicare,” the report says.