COVID-19 in 2021: The Potential Effect on Hospital Revenues

February 2021

How could COVID-19 affect the financial health of hospitals in 2021?

In 2020, COVID-19 undermined our nation’s health and severely tested our hospitals and health systems. At the same time that a series of spikes in COVID-19 cases and hospitalizations put intense pressure on hospital staff and resources, steep declines in non-COVID-19 volume led to sharply lower revenues.

As hospital executives, policymakers, and other stakeholders seek to understand hospitals’ financial state in 2021, a new set of interconnected factors must be considered:

  • Recovery of hospital volumes: The degree and pace at which inpatient, outpatient, and emergency department volumes return
  • COVID-19 vaccine progress: The availability of vaccines, the speed of distribution, and the prioritization of different populations for vaccination
  • Decline in COVID-19 cases: The degree and pace at which COVID-19 cases decline, based on public use of social distancing and achievement of herd immunity

In this report, Kaufman Hall used historical hospital revenues and different possible paths for these three recovery factors to forecast 2021 hospital revenue, a critical criterion in determining the financial health of America’s hospitals. The report presents two scenarios related to the three recovery factors—one more optimistic and one more pessimistic. Both scenarios are realistic, and both show a significant revenue loss compared with what would be expected absent the effect of COVID-19. The report also shows expense factors associated with COVID-19 likely to continue to pressure hospital finances as the pandemic continues.

This report was prepared at the request of the American Hospital Association.

Contents

  1. Introduction
  2. Key Findings
  3. Observations
  4. Methodology

Related Resources

Special Bulletin
Member
The AHA today made a series of filings in district court to ensure that 340B hospitals are promptly repaid and that the rest of the hospital field is not…
Advisory
Member
The Centers for Medicare & Medicaid Services (CMS) July 15 released its calendar year (CY) 2023 outpatient prospective payment system (OPPS) and…
Advancing Health Podcast
Public
For three decades, the 340B drug pricing program has enabled hospitals that serve high numbers of low-income patient populations to stretch scarce federal…
Webinar Recordings
Public
Case Studies
Vail Health formed Eagle Valley Behavioral Health (EVBH), a 501c3 nonprofit, to lead the community collaboration ensuring access to superior behavioral health…
Special Bulletin
Member
The CMS yesterday released a proposed rule seeking comment on potential Conditions of Participation (CoPs) for certain rural and Critical Access Hospitals (…