Dive Brief:

• Thanks to federal COVID-19 relief dollars, Banner Health was able to remain in the black for 2020 even though operations were significantly affected by the pandemic, which initially caused the Arizona-based system to post a loss through the first six months of last year.  
• In fact, Banner would have posted an operating loss without the federal rescue funds, according to the system's latest financial documents. Of the $452 million in federal funds Banner has received, about $316 million were recognized as other operating revenue in 2020. 
• The pandemic created significant cost pressures during the year as the system weathered multiple surges in COVID-19 patients, resulting in increased labor costs in addition to supply costs. 

Dive Insight:

The pandemic upended hospital operations in the U.S. in 2020. As volumes sagged, particularly for lucrative procedures, hospitals also had to navigate surges in caseloads of COVID-19 patients, exhausting labor and supplies. 

Arizona's largest provider painted a picture of the havoc the virus caused throughout its 32-hospital footprint spread throughout the Phoenix and Tuscon areas and rural areas of Colorado, Wyoming, Nebraska, Nevada and California.

Banner recorded its highest ever occupancy rates in Arizona in the month of July during the first surge of patients. But that record was later smashed in December when caseloads inundated Banner. 

"The second surge was roughly 50% larger than the first, pushing the inpatient census to record levels near or above capacity," Banner disclosed in its latest financial documents.

It strained hospital resources as administrators hired contract labor "at premium rates" as hospitals around the country sought out extra staffing help for their units, demand so high it drove up prices. 

Patients were sicker and stayed longer, adding to costs pressures, Banner said in its documents. In December, patient days were 33.4% higher than the year prior.

Overall, total surgical volume for the year was down nearly 10% and ER volume fell by 18% compared to 2019 volumes.