Federal relief buoyed hospital finances during the first year of the COVID-19 pandemic even though hospital operations took a hit, according to a study published in JAMA Health Forum Friday.
The pandemic created unforeseen challenges for the healthcare system, including hospitals canceling elective procedures and patients postponing care. At the same time, costs rose.
While the average operating margin suffered in 2020, the average profit margin was similar to previous years, Johns Hopkins University researchers found.
The average operating margin dropped from -1.0% to -7.4% from 2019 to 2020, according to the study. But the share of other non-operating income, including relief funding, grew almost six percentage points from 4.4% to 10.3%.
The average profit margin “remained stable” compared to data from previous years, the study says. Researchers assessed the finances of 2,163 hospitals from January 2016 to December 2020 using RAND Hospital Data derived from Medicare cost reports.
“Although hospitals experienced a sizable reduction in operating margins in 2020, their overall profit margins remained similar to those in prior years, suggesting that the COVID-19 relief fund effectively offset the financial losses for hospitals during the COVID-19 pandemic,” the study found.
The Coronavirus Aid, Relief and Economic Security Act and the Paycheck Protection Program and Health Care Enhancement Act provided $175 billion to support hospitals in 2020.