CHA News

Hospitals Face Long, Hard Road Back to ‘Normal’

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As vaccination rates climb and businesses begin to reopen, there is a growing sense that the pandemic is waning, but we must remember that it’s been barely more than 100 days since the number of COVID-19 cases peaked in California

With the peak just a few months old, and the pandemic well into its second year, the ramifications for California’s hospitals are devastating and long-lasting. This was confirmed Wednesday when health care financial consulting firm Kaufman Hall released a report that quantifies how the pandemic damaged the financial health of hospitals in 2020 and forecast continued fiscal impacts through 2021 and possibly beyond. 

According to the report, prepared by Kaufman Hall at the request of CHA, California hospitals lost more than $14 billion in 2020 due to the pandemic. The financial damage caused by the pandemic will continue at least through the rest of this year, with California hospitals expected to lose an additional $600 million to $2 billion, depending on vaccination rates and the path of the virus. Hospital operating margins are expected to decline between 19% and 65% in 2021. 

On Wednesday, following the release of the report, CHA held a statewide media conference call to deliver the unsettling news that the outlook for hospitals is dire, especially as it’s uncertain whether any additional federal aid will materialize. Media reports are already beginning to help the public and legislators understand the challenges before us. (Additional coverage here and here.) 

During the call, we shared with reporters not only the bleak financial picture for hospitals, but also the need for state lawmakers to do their part to help hospitals navigate a rocky and uncertain path to recovery by not adding even more to their financial burden.  

There are many ways to do this, but two are of utmost priority this year. 

First, lawmakers should support efforts to modernize disaster readiness requirements by prioritizing access to care during emergencies and avoiding an irresponsible, $100 billion earthquake-only response plan.

Second, instead of adding weights to the ankles of hospitals that are drowning — in this case, a $6 billion proposal for mandatory bonus pay — lawmakers should be looking for ways to support hospitals through what will be a lengthy recovery period that lasts well after the pandemic has dissipated.