A study of 2,163 US hospitals shows that, despite substantially reduced operating margins in 2020, their overall profit margins remained similar to those before the COVID-19 pandemic, and government, rural, and smaller hospitals performed even better than in previous years.In the study, published today in JAMA Health Forum, Johns Hopkins University researchers assessed the financial health of 1,378 hospitals with fiscal years starting in January and 785 that begin their fiscal year in July from 2016 through 2020.
Nearly 40% of Medicare-certified general acute care hospitals start their fiscal year in January, the authors said. The team analyzed RAND Hospital Data, a compiled and processed version of Medicare Cost Reports, on Mar 12, 2022.The researchers noted that, as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the Paycheck Protection Program and Health Care Enhancement Act, Congress gave $175 billion in subsidies to help healthcare facilities and clinicians stay afloat amid the need to cancel elective surgeries and restructure facilities to treat COVID-19 patients.
Government, rural, and smaller hospitals received targeted funds. The hospitals classified the relief funds as other nonoperating income.COVID relief funds offset lossesOf the 1,378 hospitals with fiscal years starting in January, average operating margins decreased from –1.0% (95% confidence interval [CI],–1.9% to –0.1%) in 2019 to –7.4% (95% CI, –8.5% to –6.3%) in 2020.
Operating margins consist of net income from patient services divided by patient revenue, minus contractual allowances.The average proportion of nonoperating income grew from 4.4% (95% CI, 4% to 4.7%) in 2019 to 10.3% (95% CI, 9.9% to 10.8%) in 2020.