The COVID-19 pandemic weighs heavily on hospitals across the country. While major metropolitan hospitals have been hit with the highest volumes of coronavirus patients, rural hospitals had been struggling financially since long before the viral outbreak hit its stride.
In March 2020, the Centers for Medicare and Medicaid Services (CMS) advised all U.S. hospitals to refuse elective procedures to focus on and preserve resources for COVID patients. While compliance was optional, this official recommendation was heeded by most facilities, and participating providers are now left feeling the financial impact. Elective procedures are a major source of income for hospitals, regardless of their location.
Here, we take a look at which regions (urban vs. rural) are facing the most adverse consequences from COVID-19.
How are urban hospitals affected by COVID-19?
The story of how hospitals have been affected financially by COVID-19 is one that has been front and center in the media since the virus first gained traction. Still, however, data for the virus’ financial impact on urban hospitals specifically is hard to come by. What we can determine is that major metropolitan areas like New York and New Jersey were hit first and hit the hardest.
Top 10 hospitals by COVID-19 diagnosis volume
Mount Sinai Medical Center
Long Island Jewish Medical Center
New Hyde Park
North Shore University Hospital
Morristown Medical Center
Good Samaritan Hospital
Our Lady of the Lake Regional Medical Center
St Barnabas Hospital
Ocean Medical Center
JFK Medical Center
Fig. 1 Data from the Definitive Healthcare Medical Claims database. Commercial claims data is sourced from multiple medical claims clearinghouses in the United States. Data is updated monthly. Accessed June 2020.
To get a better idea of the effects of COVID-19 on urban hospitals, we can use larger data sets for hospital financials in general and extrapolate to approximate financial losses for urban hospitals specifically.
How severe are urban hospital financial losses
The American Hospital Association (AHA) performed four analyses to quantify the financial challenges that hospitals have faced throughout the COVID-19 crisis:
How COVID-19 hospitalizations affect hospital costs
Additional costs associated with personal protective equipment
What costs were accrued by hospitals offering additional support to their workers
These analyses indicated that, over the four-month period with the highest volume of coronavirus diagnoses (March – June), hospitals have experienced a collective $202.6 billion financial loss, or an average loss of $50.7 billion per month.
The National Library of Medicine states that rural hospitals are generally smaller than urban hospitals — as much as one-third smaller by average bed count. With this in mind, we can assume that over two-thirds of the $202.6 billion loss suggested by the AHA belongs to urban hospitals. This implies that urban hospitals alone have suffered financial losses of approximately $133.7 billion.
Only approximately 20 percent of the U.S. population lives in a rural area. This smaller portion of Americans is generally comprised of older individuals with higher rates of chronic conditions. This same population is also more likely to be under- or uninsured. The result is fewer, smaller hospitals treating higher volumes of sick patients with more unreliable insurance situations.
These rural hospitals may struggle to attract and retain physicians as well, so if even one doctor at a rural hospital contracts the coronavirus while treating ill patients, the effects can be devastating.
To make matters worse, these rural areas are often popular vacation spots. Rural hospital admins have reported seeing people from urban areas return to their vacation homes during the pandemic. This results in the further spreading of germs at a very sensitive time, and further strain on already limited rural hospital resources.
For rural hospitals, COVID-19 is making an already bad situation even worse. Any amount of additional financial loss could put the aforementioned 453 vulnerable hospitals in a near-critical state.
Urban vs. rural hospitals in the wake of COVID-19
While urban hospitals have certainly been through a lot these past few months, rural hospitals needed our attention even before these events took place. The point of this conversation is not to minimize the plights of urban hospitals, but to bring awareness to our rural areas which cannot stand to lose any more providers.
Curious about hospital financials as a result of COVID-19? How about effects of the elective surgeries pause as suggested by CMS? If so, you can watch our on-demand webinar replay, The Short-Term Prognosis for Elective Surgeries, for more details and hospital insights.