COVID-19 has put unprecedented strain on healthcare systems around the world. With all this stress comes significant costs, borne by health systems, tax bases, and individuals. It’s impossible to know precisely how much COVID-19 has cost so far, but some important statistics are coming into focus.
Loss of Revenue from Patient Default of Direct COVID-19 Hospitalization Costs
The cost of COVID-19 hospitalization varies based upon case complexity, pivoting in large part around whether or not the patient must be intubated. Costs of aggressive interventions, such as monoclonal antibody treatments – of which there is a limited supply – also play a role.
The state with the highest average charge for complex COVID hospitalization is Nevada, at $472,213. The lowest is found in Maryland, with an average charge amounting to $131,965 – a difference of more than $340,000. The total charge includes ICU costs, ventilator costs and costs for room and board of increased complexity.
Likewise, most states average a $200,000 to $300,000 difference between complex and noncomplex cases. The lowest noncomplex case cost is $31,339 (Maryland) while the highest is $111,213 (California). Three states maintain costs for noncomplex COVID cases above $100,000. The average difference across 50 states and the District of Columbia being $223,360.
Throughout 2020, federal reimbursement was available to help hospitals defray costs associated with care for uninsured patients. Unvaccinated people in particular were and are vulnerable to serious and expensive complications. According to the Kaiser Family Foundation, this amounted to:
- 690,000 vaccine-preventable COVID-19 hospitalizations from June through November 2021
- About $13.8 billion in hospital billing, assuming an average hospitalization cost of $20,000
It is reasonable to conclude the actual figure is far higher, perhaps nearing $30 billion. As insurers begin to reinstate co-pay and other out-of-pocket charges in lieu of continued federal funding, patients can be expected to default on a significant portion of those charges, costing individual hospitals millions.
Upon examining the costs of complex COVID cases, there was no correlation between a state’s high cost of complex cases and percent a state’s population that has been vaccinated.
The root cause may be related to other factors like hospital inefficiency, low staffing levels or training/competence levels of clinical staff.
Cost to Hospitals of COVID-19 Staffing Upheaval
Attrition of skilled medical staff, including physicians and nurses, is a major and growing factor that will shape the future of the pandemic. It may reverberate through healthcare for years to come. In June of 2021, it was reported that over the previous decade.
That includes some striking outcomes in more recent history:
- Since 2015, the average hospital turned over 89% of its staff
- From February through May 2020, staffing contracted by 9.5%
Of all categories of healthcare workers surveyed, Certified Nursing Assistants (CNA) saw the highest level of turnover at 27.7%. Patient Care Technicians (PCTs) saw a rate of 19.3%. Bedside registered nurses averaged a 16.8% turnover, and Physician Assistants (PA) reached 14.2%.
Healthcare turnover rates had , before the pandemic began. Since then, healthcare has been hit hard by The Great Resignation, the growing trend of workers seeking higher pay, better hours, and improved safety as the pandemic drags on.
When turnover strikes a hospital, even entry-level roles can take 84 days to fill, representing a combined investment and loss of thousands of dollars. Hiring surveys with healthcare HR experts estimate $16,999 to $25,000+ (not including on-boarding costs) to fill an average position, with the amount rising by seniority.
As hospital staff continue to burn out or walk out, hospitals could end up absorbing millions of dollars in losses per hiring cycle. A dearth of qualified talent has the potential to adversely affect care quality and outcomes. Likewise, in some areas, vaccine resistance has been responsible for sidelining thousands of healthcare professionals when their communities need them most, resulting in further avoidable costs.
Verified Losses for Hospitals Continue to Mount
Although figures are not yet available to quantify hospital losses over the course of 2021, the American Hospital Association estimates four-month financial losses of $202.6 billion from March 1 to June 30 in 2020. This amounts to an average of about $50.7 billion per month. This period of time has been extensively researched, as it represented the beginning of the pandemic’s impact.
Total revenue loss from cancelled surgeries in the study period is estimated at $161.4 billion. This accounts for cancelled hospital services including all levels of elective and non-elective surgeries, outpatient treatment, and reduction in emergency department services.
To establish and maintain the necessary supply of personal protective equipment (PPE) over the four-month study period, hospitals and health systems spent an estimated $2.4 billion. This is before supply chain issues caused further rationing and higher costs for PPE, so the figure is likely to have risen.
The costs of additional front-line worker support common at the beginning of the pandemic added an estimated $2.2 billion during the study period. This included childcare, transportation, housing, testing, screening, and related costs. Much of this support has since been reduced or eliminated.
Prior to the pandemic, the Congressional Budget Office projected between 40% and 50% of hospitals could have negative margins by 2025. That estimate has not been updated since, but it is likely to be substantially higher today.
Some Good News for Hospitals Expected in 2021 Data
The overall picture of financial losses to hospitals resulting directly from COVID-19 is sure to become clearer as more data from 2021 is published. Although hospitalization rates are in decline and both known strains of the Omicron variant appear less virulent than the Delta variant, it may take decades to reverse the pandemic’s impact on the healthcare system – in the United States and around the world.
When case numbers finally decline, the biggest lasting threat to healthcare may well be the contracting talent pool, longer hiring cycles, and higher retention costs. If there is one bright spot in the numbers, it is this: Nursing school enrollment is continuing to climb even as today’s nurses reassess their careers.
We will continue to provide updated information on COVID-19’s impact as it becomes available.
JP Boyle & Associates is a health technology executive search firm serving clients in North America, Europe, Asia and the Middle East.
