Inside INdiana Business is reporting that the American Hospital Association is projecting that hospitals and health systems throughout the country could lose more than $320 billion this year as a result of the COVID-19 pandemic. In Indiana, it is estimated that eight rural hospitals are at risk for closing this year. A recent report from the Indiana Hospital Association shows Hoosier hospitals saw a negative operating margin of 8.3% in April, with that number growing to 27.7% for rural hospitals.
In an interview with Business of Health Reporter Kylie Veleta, IHA President Brian Tabor said the financial strain has multiple causes, including a drop in outpatient services and emergency room visits.
“Throughout this pandemic, what we saw was as revenue fell, costs rose and there was tremendous amount of resources expended into increasing the capacity that we needed to address COVID here in the state of Indiana,” said Tabor. “Working very closely with our amazing state health leaders…we were able to do things like expand the number of intensive care beds from 900 to well over 1,400 in just three weeks and that took reconfiguring facilities and capital expenses.”
The IHA says inpatient volume at Hoosier hospitals fell 26% and emergency care declined by 40% as a result of the pandemic, with outpatient surgery and other services plummeting about 50% each.
The negative operating margins mean total expenses were greater than total revenues. Tabor says there were concerns about the future of Indiana’s rural healthcare safety net before the pandemic.
“I think with the financial toll that we’ve had because of COVID at some of those facilities, I think they face an even more uncertain future, which is why we really need policies that support them. But they’re working hard to make sure that they’re there for their communities.
Tabor cites a national study by consulting research firm Guidehouse that says before COVID, 31% of Indiana’s rural hospitals were at high financial risk.
“It’s just so important, not just for the immediate public health needs that we have right now to battle this outbreak, but also for the long term viability for those rural communities. The vitality, the ability to attract future economic development really depends on having a strong healthcare system so this is not a time when we can afford to have those rural hospitals close.”
Tabor says public policy will play a huge role in ensuring Indiana’s rural hospitals can continue to serve their communities.