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AHA commissioned the AHA to do a report on the future revenue/losses of healthcare and they are projecting $50B - $120B in losses in 2021. Big gap right. Well, the gap is due to assumptions, Vaccine distribution and return to pre-COVD habits. 

What would your assumptions be?

FTA

Hospitals could lose between $53 billion and $122 billion due to the lingering effects of COVID-19, depending on the speed of vaccine distribution and complete recovery of patient volumes, according to a new report from Kaufman Hall.

Under an optimistic scenario, hospitals would lose $53 billion in revenue this year. The loss would primarily come from a $27 billion decline in outpatient revenue and $17 billion for inpatient as well as $9 billion in emergency department revenue.

Under a more pessimistic scenario, hospitals would lose $122 billion thanks to a $64 billion decline in outpatient revenue.

Hospitals could lose billions more if consumers and hospitals adapt to a “new normal” of slower or only partial recovery of patient volumes. Another concern is a cyclical rise and fall of COVID-19 surges as residents stop social distancing before herd immunity is reached, the report said.

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Which do you think it will be? Closer to $53B / $120B or Neither for the healthcare industry.

https://www.fiercehealthcare.com/hospitals/kaufman-hall-hospitals-close-between-53-and-122b-year-due-to-pandemic

 

Transcript

This transcription is provided by artificial intelligence. We believe in technology but understand that even the smartest robots can sometimes get speech recognition wrong.

 Today in Health it, the story is Kaufman Hall has a new report out and spoiler alert, this isn't a pick me up. My name is Bill Russell. I'm a former CIO for a 16 hospital system and creator of this week in Health IT I channel dedicated to keeping health IT staff current. And engaged. I just wanna make you aware of some things we're doing over at this week in Health It we're introducing written content to our website for the first time, and we're gonna do that this month actually on March 18th.

We continue to to adapt based on our discussions with you in the community, and some of you have said, Hey, you don't have time to listen to a 60 minute podcast, but you do have time. To Skimm an article. So we have done just that. We are introducing two kinds of articles. The first is a digest of the interviews that we do with healthcare executives and influencers.

The second is we have some feature stories that are gonna be written. We hired two phenomenal feature writers. And they will be producing two features every month, and we're really looking forward to that, and we're excited about that. So check that out. March 18th this week, health.com. Okay. Onto today's story.

This is from Fierce Healthcare Hospitals could lose between 53 billion and 122 billion due to lingering effects of Covid 19, depending on the speed of vaccine distribution. And complete recovery of patient volume. According to a new report from Kauffman Hall, the report released Wednesday and commissioned by the American Hospital Association details several factors that will continue to depress hospital finances this year.

The report comes as the AHA is pressing Congress to include more money. For the Provider Relief fund in its next package, and there's some quotes here, I'll skip the quotes. Hoffman Hall explores two scenarios hospitals could face when it comes to revenue loss. Under the optimistic scenario, hospitals could lose 53 billion in revenue this year.

The loss would primarily come from 27 billion decline in outpatient revenue and 17 billion in inpatient, as well as 9 billion in emergency department revenue. Khanhall estimates that volume return to pre pandemic levels alongside revenue. It also relies on supply distribution and administration of Covid 19 vaccine, as well as a sustained decline in cases.

Okay. Hospital outpatient revenues have been slammed by the pandemic as patients have been hesitant to go to the hospital for medical care, for obvious reasons. Under a more pessimistic scenario, hospitals would lose 122 billion thanks to a $64 billion decline in outpatient revenues. Hospitals could lose billions more if consumers and hospitals adapt.

To a new normal or slower or only partial recovery of patient volumes. Another concern is a cyclical rise and fall of Covid to 19 surges as residents stop social distancing before herd immunity is reached. The report said while hospitals are still expected to see revenue declines in 2021, major increases in supplies and staff are expected to continue this year.

Kaufman estimated that supply expenses such as. Purchasing personal protective equipment increased 13% in 2020 compared to 2019, and labor expense increased by 14%. Despite many hospitals, furloughing portions of their workforce, hospitals have faced substantially higher costs. For traveling nurses and other things.

Let's see. Anything else exciting in here? Ha's President and CEO. Rick Pollock said this report underscores the need for more funding to be added to a $175 billion provider relief fund passed by Congress last year as part of the Caress Act. The HA estimates roughly 4 billion is left to be allocated to providers.

Uh, okay. Anything else? Nah. Let's just go onto the, so what here? Anytime we see these stories, you, you have to do context, and I hate to say this first, but recognize that Coffin Hall is in the business of helping organizations to do cost cutting measures. So by publishing this report, they actually fuel their business.

So you have to always keep those things in mind. In healthcare, I'm not saying they're doing it for that purpose. Clearly they were commissioned by the AHA. So let's look at the AHA. The AHA represents hospitals. They wanna get funding. This kind of report becomes ammunition for that kind of funding. So, makes sense.

There's a lot of motives here for this report being drawn, and there's also a lot of assumptions. Anytime I see a report like this, I look at the assumptions. I look very closely at them to understand what they're actually doing. A friend of mine who used to be a uh, CPA, he would generate the reports for large publicly traded.

Corporations. He would say that writing the annual report was pretty easy and the financials was pretty easy until you got to the footnotes, he said, and we would spend days and days arguing on the footnotes. He said, if you really wanna understand what's going on in an organization, look at the footnotes.

And so when you know, when I look at this report and I look at some of their assumptions, where do you fall? Will it be 50 billion? Will it be 120 billion? I don't really know. Here's the thing, I do know. The impact of covid on hospitals was not uniform, just like it wasn't uniform on individuals and families.

Some people lost their jobs and have struggled mightily while others have not. The same is true with health systems, blanket statements and blanket bills to provide funding for health systems to support their increased costs. Lacks vision if you continue to subsidize health systems that can't figure out how to operate a profitable health system and maintain a healthy balance sheet.

You're gonna get exactly what you pay for, or in this case you incentivize. Okay, I'll put away my soapbox for a minute On the report and the motives and those kind of things, here's what I am hearing. Most health systems are ramping up their projects that have been put on hold. They also have a slate of projects that are COVD related.

That are not going away. This is not exactly the activity of organizations that don't have money. They've made the necessary adjustments over the last 12 months and they are looking ahead to a post covid world. Less people, same amount, or even more projects and new initiatives are right around the corner.

If I were ACIO in healthcare. I would be exploring automation in a big way in every area. You could possibly figure out a way to use it. I would be looking at creative partnerships that could cut my costs and increase my throughput and potentially look at standing up new services in locations overseas like Providence has done.

They have almost 300 staff now in India providing follow the sun type support for their data centers and much more than that. One last thing before you move on from this. Consider this. Idea. What if revenues don't come back? What if habits have changed permanently? What if new entrants have come into the market that you're not aware of?

Consider the fact that revenues may not come back, and what adjustments are you going to need to make in order to make the new revenue stream work for your health system? I told you this wasn't gonna be a pick me up. That's why I gave you the spoiler alert in the beginning. All right. That's all for today.

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