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40% of Providers at Risk of Closure Due to Financial Implications of COVID-19

Analysis  |  By Jack O'Brien  
   June 30, 2020

Definitive Healthcare also found that at-risk organizations have laid off non-essential staff at twice the rate of those not at risk.

Forty percent of acute care organizations are at risk of closure, two-thirds of which are organizations with less than 100 beds, due to financial challenges stemming from the coronavirus disease 2019 (COVID-19) outbreak, according to a Definitive Healthcare survey released Tuesday morning.

At some point this year, over 40% of organizations expect to hit peak bed capacity and 30% predict they will face clinical staffing shortages. The survey also found that at-risk provider organizations have laid off non-essential staff at twice the rate of those not at risk.

Related: A Quarter of Rural Hospitals at 'High Risk' of Closure, COVID-19 Likely to Make it Worse

Nearly 75% of organizations indicated that they obtained personal protective equipment (PPE) from "means outside of their normal supply chain methods."

The survey is the latest glimpse at how hospitals and health systems have struggled with the financial and operational challenges presented by the pandemic, which led to the widespread cancellation of elective surgeries for about two months.

Related: 4 Financial Opportunities for Health Systems Amid COVID-19  

Like health systems and hospitals, 36% of physician practices are at risk of closure, including nearly 70% of organizations with 10 or less physicians.

Nearly nine-in-ten organizations reported that they have yet to see their peak case rate, though a quarter of those surveyed predict clinical staffing shortages this year. At-risk practices have also laid off non-essential staff at more than three times the rate of those not at risk.

"Both of our COVID-19 research studies point to a few overlapping concerns: risks of closure due to financial implications – particularly in smaller organizations, an uptick in non-essential staff layoffs, PPE shortages, clinical staffing shortages due to COVID-19 exposure, and resource distribution concerns," Kate Shamsuddin, chief product officer of Definitive Healthcare, said in a statement.

The survey results were released less than a week after a Kaufman Hall report indicated that returning hospital volumes might represent the "first signs" of a financial recovery for provider organizations.

Related: Hospitals See 'First Signs' of Financial Recovery  

As it relates to testing incoming patients, over 80% of acute care organizations are utilizing multiple screening methods. 

Adapting to the rising popularity of virtual care options, the survey found that nearly all physician practices have implemented telehealth services to care for patients during the pandemic.

Related: AHA Says COVID-19-related Losses for Hospitals Will Surpass $200B by June 30  

Jack O'Brien is the Content Team Lead and Finance Editor at HealthLeaders, an HCPro brand.

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