US hospitals are projecting a significant revenue shortfall in 2021 due to the pandemic, according to a new report commissioned by the American Hospital Association. 

In an optimistic scenario, hospitals and health systems could suffer a $53 billion loss in total revenue in 2021. Under a more pessimistic budget scenario, that revenue loss could total $122 billion this year.

The optimistic projection assumed that vaccine supply, distribution, and administration aren’t delayed and residents continue to practice social distancing until herd immunity is achieved.

The pessimistic scenario, on the other hand, would be more likely to come true if vaccine supply and distribution are delayed and residents don’t practice social distancing, both of which contribute to a cyclical rise in Covid-19 cases and hospitalizations.

More insight: Treating Covid-19 patients is more expensive for hospitals, especially when they can’t offset those costs with as much usual expected revenue from non-Covid patients.

“During the pandemic, people have put off needed care, in some cases to the detriment of their health,” Rick Pollack, AHA president and CEO, said in a news release. “In addition, the costs of labor and supplies have increased, adding to financial stress.”

Hospitals aren’t just plagued by decreased non-Covid patient volume. They also saw added expenses in many categories last year.

Those costs included a 17% overall uptick in drug expenses per patient discharged and a 16% increase in purchased services per patient, which can include the cost of sterilization and maintaining safe spaces with Covid-19 patients.

Labor expenses were up 14%, due in part to hospitals needing to hire contract labor and give hazard pay to workers. And supply expenses were up 13%, as hospitals needed to purchase personal protective equipment, as shortages of needed equipment led to increased prices. 

The new projections come after an AHA report last summer estimated that hospital revenues for 2020 would be down at least $323.1 billion.

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