A new study reveals that nearly 75 percent of all U.S. hospitals were able to post positive operating income at the height of the Chinese Coronavirus pandemic, primarily due to relief funds provided by the government.
As Axios reports, the analysis by JAMA Health Forum shows that the average hospital’s operating margins – the difference between revenue and expenses – hit an all-time high in 2020 and 2021, the first two years of the pandemic. Many hospitals continue to post improving operating margins even after 2022 despite the rising inflation, which some have attributed to the massive profits in the first two years of COVID.
The report analyzed over 4,223 hospitals across the country, and found that the average operating margin increased from 2.8 percent prior to the pandemic to approximately 6.5 percent during 2020 and 2021. Over 2,000 hospitals, approximately 53 percent, didn’t suffer any financial problems even after receiving no relief funds. Of these facilities, roughly three-quarters still received emergency funding from the government anyway.
“This resulted in moving many hospitals to peak historical operating margins (i.e., profitability), rather than simply restoring them to pre-pandemic operating margins,” the report states. “It will be important to consider alternative ways of allocating scarce public dollars to support our nation’s health system in crisis.”
By contrast, the American Hospital Association (AHA) claims that roughly half of all hospitals now have negative operating margins. Spokesman Aaron Wesolowski stated that 2022 was “the worst year of the pandemic financially for hospitals and health systems, due to the rapid increase in expenses and the massive spike in COVID volume from the Omicron surge early that year.”
Wesolowski attacked the JAMA study as “incomplete,” claiming that it was “not reflective of the many immense struggles and challenges the hospital field has faced and continues to face, including a workforce shortage crisis, along with skyrocketing input costs for supplies, equipment, drugs and labor, and persistent inflation.”
Nevertheless, the study’s authors concluded, their research proved that “COVID-19 relief funds went to some hospitals that did not need financial support or the amount of funding allocated.”