Impact of COVID-19 Relief Funds on Rural Hospitals’ Financial Performance: A Closer Look at the Numbers
The American Hospital Association has released a new issue brief highlighting the impact of COVID-19 federal relief funds on rural hospitals’ financial performance. The report reveals that while the relief funds helped prevent financial losses for many hospitals during the pandemic, questions remain about the future financial stability of the 48% of rural providers that consistently experience negative operating margins.
According to the brief prepared by the Virginia Commonwealth University College of Health Professions, Department of Health Administration, the relief funds caused the largest increase in total margins for hospitals that would have experienced losses. However, as the funding declined in 2022 and hospitals faced persistent financial challenges, margins dropped, especially for hospitals that were already struggling financially prior to the pandemic.
Key findings from the report include the fact that about half of rural hospitals consistently experienced negative operating margins from patient services before and during the pandemic. The relief funds benefited all rural hospitals, with those with negative total margins seeing the greatest benefit. Additionally, rural hospitals that were part of hospital systems were better able to mitigate the financial effects of the pandemic.
The report also highlights the long-standing financial struggles of rural hospitals, with half currently operating in the red. Between 2010 and 2021, 136 rural hospitals closed, with 19 closures occurring in 2020 alone. The pandemic relief funding provided much-needed support to smaller, rural hospitals, but as the funding declined in 2022, concerns about financial stability remain.
Overall, the report underscores the importance of ongoing financial support for rural hospitals, especially those that have been historically under-resourced. As the healthcare landscape continues to evolve, ensuring the financial viability of rural hospitals will be crucial for maintaining access to care in underserved communities.