Emerging Research Confirms Financial Challenges for Hospitals in 2022
Hospitals and Health Systems Face Financial Challenges in 2022
Recent research has confirmed what hospitals and health systems have been saying repeatedly – 2022 was one of the most financially challenging years for the hospital field, and recovery remains difficult. Reports from Fitch, Moody’s, and S&P describe how nearly every financial metric for hospitals and health systems declined in 2022. Operating margins, earnings, and days cash on hand all saw significant decreases, leading to more credit rating downgrades than upgrades.
A study by the Urban Institute highlighted the financial vulnerability of hospitals during the pandemic, with operating margins plummeting to -40% in April 2020. Federal support played a crucial role in helping hospitals remain financially viable during this time. However, Kaufman Hall’s August National Hospital Flash report suggests that financial recovery may have slowed or even reversed. Hospital volume lagged in July, resulting in a slight decrease in financial performance month-over-month.
Critics of hospitals often focus on single point-in-time operating margins, ignoring the broader financial challenges faced by the industry. The past three years have been marked by extreme volatility, with 2021 serving as a brief period of stability amidst cascading waves of illnesses, inflationary pressures, and rising expenses for drugs, labor, supplies, and equipment.
Despite these challenges, hospitals and health systems continue to work tirelessly to improve patient care and innovate with clinical care teams. They are striving to create efficiencies that reduce costs and make care more affordable. The recent analyses serve as a reminder that hospitals need to remain financially strong and healthy to ensure the well-being of their patients and communities.
As America’s hospitals navigate these financial challenges, it is clear that their dedication to improving patient care remains unwavering. The road to recovery may be long, but with perseverance and innovation, hospitals and health systems can overcome these obstacles and emerge stronger than ever.