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Hospital financial health: a difficult recovery
Emerging research has confirmed what hospitals and health systems have been saying again It is again It is again – that 2022 was one of the most financially challenging years the hospital sector has ever experienced and that recovery remains challenging.
- Fitch, Moody’s It is S&P recently released reports describe how nearly every metric of the financial health of hospitals and health systems has declined in 2022. Operating margins and profits have deteriorated significantly, days of cash on hand (a measure of financial resiliency) have decreased, and as As a result, most agencies are reporting significantly more credit rating downgrades than upgrades.
- Search of the Urban Institute examined the financial vulnerability of hospitals and health systems during the pandemic. The study concluded that operating margins fell to -40% in April 2020 and highlights the importance of federal support for hospitals to remain financially viable during the pandemic.
- Kaufman Hall August National Hospital Flash Report suggests that the financial recovery may have slowed or reversed. Hospital volume was down in July, which resulted in a slight decline in financial performance month over month. The report also finds that some measures of uncompensated care have increased, which is likely linked to the millions who have been dropped from Medicaid as states resume eligibility redeterminations.
All of these studies tell a different story from the false narrative of hospital critics who myopically focus on single-moment operating margins. These critics often choose a few select health systems to make sweeping generalizations about the financial conditions of all hospitals and health systems. As we look back over the past three years, it is clear that 2021 was the eye of the storm – a brief period of stability marked by extreme volatility. Critics of hospitals often focus exclusively on a fleeting period of stability, ignoring other available data that show the real costs of cascading waves of disease, inflationary pressures, and skyrocketing expenses for medicines, labor, supplies, and equipment. .
America’s hospitals and health systems work hard every day to improve patient care. They innovate with clinical care teams to improve care delivery and outcomes. They are doing this work amid historic financial challenges, working hard to create efficiencies that can reduce costs and make health care more affordable. The analyzes above provide a more comprehensive picture of recent financial challenges. They should serve as a reminder that hospitals and healthcare systems are still recovering and will need to be financially strong and healthy to keep your patients and communities healthy.
Ben Finder is director of research and policy analysis at AHA.