CEO Message

CEO Message: A Dire Financial Picture for Hospitals

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A new report released last week by consulting firm Kaufman Hall has confirmed the depths of the financial crisis facing California’s hospitals.

The report, commissioned by CHA, found that California hospitals are facing a roughly $15 billion net loss in 2020 revenues in the wake of the COVID-19 pandemic. Perhaps more important, the report foretells of long-term economic damage to California hospitals.

From Ken Kaufman, chair of Kaufman Hall: “Since the outset of the pandemic, California hospitals have rightfully focused their efforts on caring for COVID-19 patients, protecting their workers, and preserving the safety of their communities. Our research shows that these vital efforts have come at an extremely high cost. When coupled with an already challenging financial environment prior to COVID-19, California hospitals are now facing a very difficult path forward.”

In March, when Gov. Newsom issued statewide executive orders to respond to COVID-19, hospitals experienced a significant decline in inpatient discharges and emergency department visits, according to Kaufman Hall data. Things got worse in April, as hospitals saw a massive decline in discharge volumes and emergency room visits.

Over the longer term, the economic impact of COVID-19 is expected to result in higher numbers of uninsured patients and Medi-Cal beneficiaries, as well as the likelihood of a longer-term reluctance on the part of Californians to seek health care services. Together, these put additional pressure on revenues.

And with state and federal assistance covering only a portion of the shortfalls, we’re keeping the pressure on the Legislature to provide a financial lifeline for hospitals, because even with state and federal assistance factored, California hospitals are facing $10 billion in lost revenue by the end of 2020.

In addition to reiterating the key point that hospitals are foundational to a safe reopening for California, we’ll be emphasizing the long-term financial peril for the health care hubs that hospitals serve as, but also the effect of COVID-19 on a field that employs nearly 500,000 Californians and drives nearly $280 billion in state economic activity.

We need your voices as well. Please continue to reach out to your senators, your assemblymembers, and your members of Congress this week to share your hospital’s story – your response to COVID-19 and the challenges that lie before you given the dire financial conditions you are facing.

California’s hospitals are strongest when we speak with one voice, and never has that strength been needed like it is now.

~ Carmela