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Hospital admissions projected to be down 10.5% in 2020

The drop in admissions suggests revenue losses that may be difficult for some hospitals to weather.

Jeff Lagasse, Associate Editor

Hospital admissions, which plummeted at the beginning of the COVID-19 pandemic, are slowly bouncing back from a steep drop at the beginning of the year. But they'll still be down by year's end. The Kaiser Family Foundation finds that admissions will be down 10.5% for the full year, compared to 2019.

Total hospital admissions dropped as low as 68.6% of predicted admissions during the week of April 11 and then increased to a high of 94.3% of predicted levels by the week of July 11. As of August 8, admission volume has dipped slightly to 90.8% of predicted levels.

Overall, the number of hospitalizations lost due to declines in admissions between March 8 and August 8 represents 6.9% of the total expected admissions for 2020.

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The analysis is based on electronic health record data from Epic Health Research Network and includes all inpatient hospital admission volume from Dec 31, 2017 to August 8, 2020, involving patients who either were discharged or had died as of September 13.

WHAT'S THE IMPACT?

The drop in admissions suggests revenue losses that may be difficult for some hospitals to weather. Hospitals' financial strength differs widely. One recent study found that the median hospital had enough cash on hand to pay its operating expenses for 53 days in 2018, but the 25th percentile hospital only had enough cash on hand for 8 days. 

Smaller hospitals and rural hospitals are among those most likely to face financial challenges in the wake of revenue loss related to COVID-19. These hospitals may be more likely to close or merge if they do not have the financial resources to make up for declines in revenue caused by the drop in admissions.

Hospitals and other healthcare providers have qualified for various types of federal assistance during the coronavirus pandemic, but much of this money was not targeted to safety net hospitals operating on narrow margins. 

Hospitals and other Medicare and Medicaid providers received grants from the $175 billion provider relief fund that is being distributed by the Department of Health and Human Services. Hospitals qualified for grants that were the equivalent to a minimum of 2% of revenue and on average received grants that amounted to about 5.6% of revenue. Hospitals that qualified for additional grants either did so by seeing a high number of COVID-19 inpatients by June 10 or were eligible as children's hospitals, rural hospitals and/or safety net hospitals. 

About $30 billion remains available for future grant allocations as of October 8. It is unclear how the Department of Health and Human Services will allocate that money.

How declines in admissions translates into lost hospital revenue depends on the type of admissions that were missed and which insurers paid for those admissions. Private insurers typically reimburse at higher rates than Medicare or Medicaid, and reimbursement widely varies by type of admission.

THE LARGER TREND

Hospitals and other providers that participate in traditional Medicare were also eligible for loans through the Medicare Accelerated and Advance Payment Programs, which are designed to help hospitals facing cash flow disruptions during an emergency. About 80% of the $100 billion in loans went to hospitals. Repayment for the loans was originally set to begin in August, but Congress later delayed the time repayments would begin and extended the period for repayment.

Hospitals are also receiving a 20% increase in inpatient reimbursement for COVID-19 patients during the current public health emergency. The Congressional Budget Office estimated that this change will increase Medicare spending by about $3 billion. Hospitals may also be eligible for loans being distributed by the U.S. Treasury, the Federal Reserve and the Small Business Administration.

The Business of Health

This special collection of stories, which will be updated throughout the month, explores how hospitals, health systems and physicians are attempting to not only financially survive, but thrive, under the new normal.

Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com