AHA Says COVID-19 Losses for Hospitals Total More Than $200 billion

May 5, 2020

About 80% of the losses are from cancelled surgeries and over services.

Today’s American Hospital Association (AHA) report on the financial effect of COVID-19 estimates the outbreak will cost American hospitals and health systems collectively $202.6 billion during the four-month period dating back to March 1 and ending on  June 30.

That works out to be about $50.7 billion of losses per month, more than $1.6 billion of losses per day, and roughly $67 million every hour.

AHA’s figures are an estimate, not an actual count of losses, which won’t come for some time yet. They are based on AHA assumptions and projections, and this is a trade association report, not a peer-reviewed article. Still, the report provides an outline, and some insight, into the financial toll the outbreak on the hospital sector.  The report doesn’t, though, dig into the disparity among hospitals. News outlets have reported on the huge divide  between well-capitalized hospitals with affluent donors and access to resources and hospitals, some of them publicly owned, with far fewer resources and oserving disadvantaged communities.

The AHA acknowledges in the report that Trump administration and Congress have pumped a total of $175 billion into “provider relief,” the first $100 billion coming from the CARES Act and  another $75 billion from the Paycheck Protection and Health Care Enhancement Act. But the report says more support is needed as hospitals.

“As the country faces the inimitable challenges of COVID-19 head-on, Americans cannot afford the cost of closed hospitals and restricted access to life-saving treatment,” the report conclues

In AHA’s estimates, the largest percentage of losses is by far from canceled surgeries and other services. The report says the losses add up to $161.4 billion, or about 80% of the total. The AHA calculated that figure by blending three different levels of service interruptions. 

The net effect of COVID-19 hospitalizations will add up to $36.6 billion losses over the four-month period, or 18% of the total. The AHA arrived at that figure by applying published cost estimates for diagnoses similar to COVID-19 and matching them up with payment estimates based on Medicare payment, including a special add-on for COVID-19. The AHA also made adjustments to take account payer mix and the payment rates of different sort of payers, including Medicaid and commercial payers.

Buying personal protective equipment ($2.4 billion, or 1.1%) and expenditures to support front-line hospital workers ($2.2 billion, or 1%) account for the rest of the losses, according to the report.

The AHA says its report probably underestimates the losses because it doesn't include other COVID-19-related costs, including drug shortages, overtime payments for employees, added expenditure for supplies and equipment other than personal protective equipment, and some additional capital costs.