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Fitch Ratings Predicts Rough Times Ahead for NFP Hospitals

Analysis  |  By John Commins  
   December 09, 2020

Hospitals will face continued financial stress in the first half of 2021, at least until vaccines are widely available.

The late-year deluge of COVID-19 hospitalizations does not bode well for the financial prospects of the nation's not-for-profit hospitals heading into the new year, according to Fitch Ratings, which on Wednesday revised its 2021 outlook for the sector to "stable" from "negative."

The ongoing pandemic-related public health emergency prompted a shutdown of money-making elective procedures in 2020 for hospitals, Fitch said, and the latest, soaring wave of COVID-19 cases suggest that elective procedures may continue to be restricted in 2021.

"Elective procedures, even at a reduced clip, should not hit hospitals as hard financially as the nationwide shutdown that cut top line revenues by around 40% in Spring of 2020," said Fitch Senior Director Kevin Holloran.

Holloran noted that hospitals are better prepared for this latest wave of COVID-19 hospitalizations than they were during when the first wave of cases struck last spring.

Because of that, going forward, elective procedures may again be limited in some regions, but not to the extent seen last spring, when hospitals nationwide shut down elective procedures.

"It's a case of 'been there, done that' in a sense with hospitals treating COVID-19 patients more efficiently, which is leading to shorter hospital stays," said Holloran.

However, Holloran said hospitals will face continued financial stress in the first half of 2021, until vaccines are widely available.

Hospitals also will face rising operating expenses in 2021 related to the pandemic.

"Providers will need to secure a mini-stockpile of ventilators, masks, gowns, drugs and certain types of beds, though adequate staffing will be the most critical component," Holloran said.

“Elective procedures, even at a reduced clip, should not hit hospitals as hard financially as the nationwide shutdown that cut top line revenues by around 40% in Spring of 2020.”

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.

Photo credit: NEW YORK, NY, USA - June 24, 2016: Fitch Ratings: Fitch Ratings logo in Lower Manhattan. Fitch Ratings is a global rating agency founded in 1913. Osugi / Shutterstock


KEY TAKEAWAYS

The ongoing pandemic-related public health emergency prompted a shutdown, of money-making elective procedures in 2020 for hospitals.

Now, the latest, soaring wave of COVID-19 cases suggest that elective procedures may continue to be restricted in 2021.

Fitch noted that hospitals are better prepared for this latest wave of COVID-19 hospitalizations than they were during when the first wave of cases struck last spring.

Because of that, going forward, elective procedures may again be limited in some regions, but not to the extent seen last spring, when hospitals nationwide shut down elective procedures.

Hospitals also will face rising operating expenses in 2021 related to the pandemic.


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