Analysis: Large majority of hospitals could lose $2,800 for treating each COVID-19 patient

A new financial analysis paints a dire picture of the financial impact of COVID-19 on hospitals, saying that 97% of hospitals could lose nearly $3,000 for every infected patient they treat.

The analysis released Tuesday from Strata Decision Technology, which offers financial planning software for hospitals and health systems, also found that a proposed stimulus from Senate Republicans won't be nearly enough to help hospitals.

The analysis comes as hospitals are increasingly worried they will be overrun with COVID-19 patients as cases in the U.S. top 40,000.

Strata looked at research from hard-hit countries like Italy and China and data from the U.S. Centers for Disease Control and Prevention to develop a proxy group of patients to simulate the costs to hospitals.

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The analysis also assumed that hospitals would be operating at 110% of normal capacity to handle a surge of COVID-19 patients.

Researchers found that the costs for COVID-19 were very high because of the complexity of the cases.

“The complexity of the patients is causing a decline in nurse staffing ratios as nurses and staff are required to help each other validate that their personal protective equipment (PPE) is properly fitted,” the analysis said. “Costs are also higher due to expanded cleaning regimens, PPE shortages, more frequent X-rays and CT scans, and overall higher supply and drug costs.”

The analysis also factored in the loss of revenue from elective procedures, which hospitals have largely shut down to preserve capacity.

“Researchers estimate that 90% of hospitals that cancel all elective procedures will shortly begin to experience negative profit margins from COVID-19 cases,” Strata said.

Strata estimated that under the worst-case scenario 97% of health systems will lose an average of $2,800 per COVID-19 case and many would lose between $8,000 to $10,000 a case.

Researchers also looked at the impact of a proposal from Senate Republicans that would raise Medicare payments to providers for COVID-19 cases by 20%.

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Hospitals would lose about $1,200 per case on average and up to $8,000 on the high end depending on their payer mix, Strata said.

The analysis recommended a 35% increase in Medicare reimbursement for any conditions related to COVID-19. But Strata hinted that too may not be enough.

“Even that increase in Medicare reimbursement would not solve the broader enterprise problem of lost revenue from canceled elective procedures,” the analysis said.

Currently, Congress is negotiating a massive $1 trillion economic stimulus package and hospitals are pressing for more than $100 billion in financial assistance to hospitals.