BOSTON (SHNS) – Hospital margins in Massachusetts fell in the second quarter despite a massive infusion of federal and state COVID-19 relief funds.
About half of Massachusetts hospitals reported positive fiscal margins in the quarter that ended June 30, but the median margin was under 1 percent, despite an infusion of government COVID-19 relief funds, and fell 4.3 percentage points from the same period in 2019, according to data released Thursday by the state.
Massachusetts hospitals reported $1.1 billion in federal funding and $160.1 million in state funding in their operating revenue through June 30, according to the Center for Health Information and Analysis report, which features hospital-specific data on fiscal margins.
If the relief funds had not been distributed, the hospital median total margin would have been negative 6.7 percent, the report said, and all hospital cohorts would have experienced negative median total margins.
Without the federal aid, “our hospitals would be in a state of somewhat destitute shape at this particular moment,” Massachusetts Health & Hospital Association President Steven Walsh said during a Health Policy Commission Advisory Council meeting Wednesday. “To this point, it’s been about a break-even proposition, but they will all come out of this weaker than they went into it.”
CHIA’s report for the quarter was expanded to include impacts of COVID-19 on hospitals operations for the first four months after Gov. Charlie Baker’s March 10 emergency declaration, and showed the community hospital sector reported the largest decrease of 7.3 percentage points.
The hit to community hospitals plunged that cohort’s median margin for the quarter to negative 4.8 percent. Profits at teaching hospitals in Massachusetts, by contrast, were up a median 3.4 percent.
The report highlights the pandemic’s dramatic impact on hospital expenses and revenue.
Net patient service revenue, which is the most significant component of operating revenue, plummeted by $1.5 billion, or 7.7 percent in the second quarter, a time when elective procedures were suspended for months to emphasize pandemic response and limit transmission risks.
As revenues evaporated, aggregate hospital expenses increased by $1.1 billion or 5.1 percent.
State officials managing pandemic response have indicated they plan to continue to allow elective procedures in hospitals while they navigate the second surge.
“We are only at intermission. The play isn’t over yet. We’re about to enter act two,” Walsh said Wednesday, referring to rising COVID-19 cases and hospitalizations that are affecting hospitals and requiring the state to set up field hospitals. “It’s going to be longer, more difficult and more tedious to meet than act one. The fatigue that our health system providers are feeling, that our frontline workers are feeling is real.”
The hospital association reported Monday that state Department of Public Health officials have alerted hospitals that COVID-19 vaccines “should be arriving in Massachusetts sometime in December and that hospital healthcare personnel will be among the first to receive them.”
(Katie Lannan contributed reporting)
