It will likely not come as a surprise to anyone, but hospitals across the country had their worst financial month ever in April, as revenue and expenses moved in opposite directions, but not in the good way, according to a report.
Overall, hospital’s EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) were 174% lower in April than the same month a year ago, and operating margins were 282% lower on a year-over-year basis, which will likely lead to a “permanently changed” healthcare industry, according to the report released by Kaufman Hall.
“April was the worst month ever for hospital finances,” said Jim Blake, managing director, Kaufman Hall in a statement. “Our nation’s hospitals are in a perilous position. They are serving as the frontlines of our battle against this virus, but the pandemic is threatening their fundamental financial viability at a time when we need them most.”
Even though many hospitals have implemented cost-cutting measures and laid off non-essential employees, that did not do enough to offset the tremendous financial impact that COVID-19 has had. The total gross revenue at hospitals was down 30% on a year-over-year basis and remains 33% below what was budgeted for the year. Bad debt and charity care are also on the rise, up 4% on a year-over-year basis and 3% higher than what was budgeted, according to the report.
It is difficult to see a path for hospitals to recover from the coronavirus pandemic. Many resources are still being allocated to caring for individuals who have contracted COVID-19 and testing those who are afraid they may have it. The pandemic is also making people afraid to go to the hospital — 40% of individuals who participated in a survey said the thought of going to a hospital made them uncomfortable.