Understanding COVID’s Economic Squeeze on U.S. Hospitals & Health Systems

There are more than 6,000 hospitals in the U.S., and 57% of those are non-profit or community hospitals.

Because of the pandemic, in 2020 hospitals were faced with new challenges. As you may well be aware, utilization and elective surgeries were put on the back burner until late into the fall. Studies from the American Hospital Association (AHA) show a $323B impact on our hospitals due to the pandemic. Also within that, Emergency Room (ED) discharge rates last year had decreased about 16%. We saw at least 36 hospitals file for bankruptcy in the fall, and we saw about a 20% compression on hospital margins. Had the CARES Act Provider Relief Fund not kicked in, studies indicate the compression would have been closer to 70%.

Economic pressures and cash flow issues related to the pandemic are certainly front of mind among leaders of the hospital systems. Other challenges include employee or staffing shortages, increased cost for equipment, safety, and care related to the pandemic, and what that’s required, and even the Centers for Medicare & Medicaid (CMS) Hospital Price Transparency rule that took place January 1, 2021. Needless to say, there’s a lot on our hospitals’ and health care systems’ plate.

Naturally, finding a solution to help mitigate costs is imperative. This is especially imperative when addressing prescription drug trend and costs, and making it a top priority this year as pharmacy is being evaluated. Despite all of these impacts on our hospital systems, drug manufacturers and pharmacy benefits managers (PBMs) remain just as focused on increasing their margins as ever. Without a risk mitigation strategy and plan in place, this trend will continue to rise – and costs associated with it.

Check out our free on-demand webinar, Top Strategies to Overcome the Toughest Hospital Pharmacy Benefits Challenges, to learn more about how to leverage pharmacy benefit management strategies to support the hospital’s economic goals.


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