The headline on Friday sounded curious enough in a media environment where health-care provider profit usually only gets scorn. “Hospitals knew how to make money,” read the banner above the New York Times’ analysis of the COVID-19 impact on the sector, “then coronavirus happened.” Sarah Kliff reports that the decision to close down elective and non-virus-related care to preserve capacity now threatens to force some of that capacity to close its doors to bankruptcy.
Oddly enough, the NYT fails to mention that the model described in its analysis has been under siege for years, especially in this election cycle:
The American health care system for years has provided many hospitals with a clear playbook for turning a profit: Provide surgeries, scans and other well-reimbursed services to privately insured patients, whose plans pay higher prices than public programs like Medicare and Medicaid.
The Covid-19 outbreak has shown the vulnerabilities of this business model, with procedures canceled, tests postponed and millions of newly unemployed Americans expected to lose the health coverage they received at work.
“Health care has always been viewed as recession-proof, but it’s not pandemic-proof,” said Dr. David Blumenthal, president of the Commonwealth Fund, a health research organization. “The level of economic impact, plus the fear of coronavirus, will have a more dramatic impact than any event we’ve seen in the health care system weather in my lifetime.”
The disruption to hospital operations may ultimately leave Americans with less access to medical care, according to financial analysts, health economists and policy experts. Struggling hospitals may close or shut down unprofitable departments. Some may decide to merge with nearby competitors or sell to larger hospital chains. “There is a huge threat to our capability to provide basic services,” Dr. Blumenthal said.