Massachusetts hospitals have taken a large financial hit due to the COVID-19 pandemic,
according to a new study from the Center for Health Information and Analysis (CHIA).
Hospitals suffered traumatic losses in March and April when elective procedures were cancelled and facilities expended large amounts of funds buying scarce personal protective equipment (PPE), creating surge beds, performing increased testing, and more. The federal CARES Act helped mitigate the losses, but CHIA found that even with federal relief, hospitals still lost money.
The 38 of 61 hospitals that participated in the CHIA survey represent approximately 74% of acute hospital operating revenues. Reporting shows median total margins plunging significantly in March across all hospital cohorts, ranging from negative 50.1% at teaching hospitals to negative 19.4% at academic medical centers. Community hospital margins decreased by one third – 33.2% – in March.
“Federal CARES Act payments improved profitability in April and May, but overall total margins remained mostly unfavorable compared to the base period,” CHIA found. Without CARES Act funding in April, community hospital total margins decreased 69%. With the CARES Act money, those community facilities experienced median total margins of negative 26.4%.
While expenses rose, operating revenue decreased. CHIA found that in aggregate, total operating revenue was lower than total expenses for all three months. As a result, hospitals and hospitals systems have faced challenging decisions on services and personnel in order to remain financially stable.