‘California hospitals are drowning’: New report says hospitals statewide lost more than $8B in 2020
SACRAMENTO, Calif. (KTXL) — Hospitals across California were hit hard by the COVID-19 pandemic, resulting in billions of dollars in losses that left more than two-thirds of hospitals struggling to break even in 2020, according to a new report released Tuesday.
According to a report requested by the California Hospital Association, California hospitals lost more than $14 billion in 2020 due to the pandemic.
Those losses were offset by federal funding through the Coronavirus Aid, Relief, and Economic
Security Act, but hospitals still lost more than $8 billion, according to the report.
“Even when you factor in the limited federal relief funds that have come to California, these massive losses will strain patient care for years to come,” said California Hospital Association President and CEO Carmela Coyle in the release.
The report said community hospitals were hit the hardest financially by the pandemic in 2020, which includes all nonfederal, short-term general and other special hospitals.
According to the study, California hospitals are expected to lose an additional $600 million to $2 billion in 2021, depending on vaccination rates and how the virus spreads.
This means that 200 California hospitals could lose money from operations in 2021, and more than 250 could struggle to break even.
“Not only could many hospitals struggle to maintain pre-pandemic service levels, a significant number run the risk of defaulting on bond covenants, losing their ability to function as independent entities and/or closing,” according to the report.
The report said hospital operating margins are expected to decline between 19% and 65% in 2021.
“The bottom line is that California hospitals are drowning, and now is the time to help them return to shore, not add more weights around their ankles,” Coyle said.
The report was conducted by Chicago-based Kaufman Hall, “a nationally respected consulting firm with extensive health care expertise,” according to the release.