It is undeniable that Massachusetts hospitals suffered a financial drubbing due to COVID-19 at the beginning of the year, and then received substantial funding from the federal government and the state in the spring and summer. What is less clear to some is how the losses and subsequent gains balance out.
Last week, the state’s Center for Health Information and Analysis (CHIA) issued its quarterly report of hospital and health system finances
using data from October 1, 2019 through June 30, 2020. The state agency found that the median total margin for acute hospitals – which is a measure of profitability – was negative 0.7%. Last year by June’s end, the median total margin was positive 3.6%.
All cohorts of hospitals showed a significant decline in median total margin compared to the same reporting period last year and community hospitals had a negative median total margin of 4.8% for the year. CHIA’s report found that if hospitals had not received substantial federal and state relief funding, the statewide median total margin would have been negative 6.7%.
While the CHIA report shows the financial results through June with and without government relief, there are some further issues to consider that are not reflected in these bottom-line figures. Hospitals often subsidize home health operations, physician practices, and other entities, and are currently permitted to transfer some of their federal Provider Relief Funding to its affiliates. Another fact is that relief funding received to date can be used to fund continuing COVID-fighting hospital operations well into 2021.
“With the second wave upon us and uncertainty lingering over the future of financial support, we are bracing for what could be another difficult year ahead,” MHA’s President & CEO Steve Walsh said of the CHIA report. “As providers treat an influx of COVID-positive patients and make the investments necessary to deliver safe care, it’s crucial that they can remain financially viable and fully accessible to their communities. We are incredibly grateful to our state and federal elected officials for helping secure the support our providers have needed to survive, and we will continue to count on their support.”