Major for-profit hospital chains started to see volumes plummet in the end of March as a result of the COVID-19 pandemic, but the effect on overall financial results for the first quarter of this year was relatively limited.
That could be a different story for the second quarter, as hospitals sound warning bells about continued effects of delayed elective care, that typically drives revenue, and increasing expenses as facilities staff up and procure needed supplies for treating patients with the novel coronavirus.
A Kaufman Hall report showed that average hospital operating margins in March dropped 150% year over year. And the American Hospital Association said this week it expects hospitals will take a $200 billion hit over four months from the crisis.
Meanwhile, Congress is reportedly only early in talks for additional COVID-19 relief legislation, having passed four pieces of legislation so far that set aside a total of $175 billion for hospitals.
Despite, the clear headwinds, Tenet and Community Health Systems in the first quarter swung to black with net incomes of $94 million and $18 million, respectively. HCA Healthcare reported $581 million in net income, a 45% year-over-year decline while Universal Health Services saw the figure drop 30% from the prior year quarter.
All those systems saw most admissions numbers drop for the quarter and cautioned that would be the same for April. "Obviously our second quarter will be materially impacted by the COVID-19 pandemic and the uncertainties around the timing of recovery," CHS CFO Kevin Hammons told investors last week.
But the chains eye this month as the start for revamping elective procedures. CHS said it expected its "reboot" to finish by the end of June and UHS said some facilities had already resumed those services.
Several states across the country have begun reopening their economies and instructed hospitals to begin elective procedures again. But the number of positive cases of COVID-19 continues to escalate, along with worries that paring back on social distancing requirements could cause the numbers to jump even higher — not to mention a potential second wave later this year.
Here's Healthcare Dive's coverage of for-profit hospital operators earnings reports for the first quarter of 2020.