Kaufman Hall, a healthcare consulting management company, recently conducted a report by request of the Texas Hospital Association in regard to the financial impact of the COVID-19 pandemic on Texas hospitals. The study found that since 2020, the number of hospitals at risk of closure doubled with almost 10% of Texas hospitals on the brink of closure.
Additionally, the report states that, even after receiving stimulus support in the first two years of the pandemic, 47.4% were operating with a negative margin in 2022, but now there’s no federal support on the way.
Part of the reason for the drop in margins for hospitals is the increasing expenses. In 2022 expenses went up $33.2 billion over pre-pandemic levels, outpacing increases in revenue. Expenses include labor, medical supply and drugs. Combined all expenses are 20% higher than pre-pandemic levels while revenue has only increased 11% in the same period.
While emergency visits and hospital discharges are lower than before the pandemic, patient stays are longer and on the rise, indicating that the patients that do visit hospitals have more severe healthcare needs than before 2020. At the same time, labor shortages in the healthcare system are stressing post-acute care services, forcing hospitals to house patients for longer periods, adding to the increasing expenses.
The report also found that urban and rural hospitals have different rates of risk. In rural areas, hospitals have a higher risk of closure. In 2019, 16% of rural hospitals were at risk, that number in 2022 has jumped to 26%.
According to the report, its findings “underscore the existential financial and operational threats Texas hospitals continue to face two and a half years after the beginning of the pandemic.”
In a recent official statement, the Texas Hospital Association called for state and federal support to help the hospitals stay open.
“Extreme pressure on life-saving hospitals creates risk for patients and the state’s overall health,” said John Hawkins, president and CEO of the Texas Hospital Association. “Hospitals are critical infrastructure for communities and serve as a backbone for health, safety, jobs and stability.”