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The financial impact of coronavirus on the healthcare industry

A report from Kaufman Hall (https://www.kaufmanhall.com/ideas-resources/article/national-hospital-flash-report-2019-year-review) revealed that profit margins and revenue were higher in 2019, compared with 2018, even though expenses were slightly higher as well. But even though revenues and profit margins were higher, there were some dark clouds already on the horizon before the country shut down because of coronavirus. Calling the gains made by hospitals “modest,” the author of the report noted that they came at a time when the unemployment rate was historically low, the economy was strong, and the federal government was easing regulations against businesses. 

Now, all of that is likely to change. Hospitals across the country will face severe financial pressure as a result of the coronavirus outbreak. Many facilities have canceled elective medical procedures, which often have higher profit margins, and the increase in overtime and staffing charges will also cause a significant hardship for facilities nationwide. 

Hospitals are also likely to see spikes in the amount of charity care and uncompensated care they offer to patients during 2020. Millions of individuals have lost their jobs — and their health benefits — and it will take months for them to get back on their feet. Many hospitals are also ceasing their debt collection and point-of-service collection efforts, which will also hamper their financial situations for the rest of the year. 

While the federal government is stepping in and providing emergency relief to many industries, including healthcare, it likely will not be enough to get hospitals back to where they were before the crisis struck. And it could take years for the industry to fully recover and get back to the cautious optimism it had heading into this year. The American Hospital Association has called the CARES Act an important “first step,” but added that more will be needed in the future. ([AHA statement on Senate coronavirus relief legislation | AHA](https://www.aha.org/press-releases/2020-03-25-aha-statement-senate-coronavirus-relief-legislation)) 

More rural hospitals, especially, which were already facing financial challenges, may be forced to close because of the impact that coronavirus is having on the healthcare industry. 

The financial impact of coronavirus on the healthcare industry is being felt now and will be felt for years to come. All the gains the industry has made in recent years to put itself on sound financial footing have been washed away but can be rebuilt. The upswing that hospitals ended 2019 on can be regained through effective planning and sound decision-making.

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