Cal. hospitals fight red ink after prepping for COVID-19 surge that never came

Hospitals in California, many previously unprofitable or barely profitable, are struggling financially after investing in personnel and equipment ahead of the expected surge in COVID-19 cases that never materialized.

Hospitals incurred the double whammy of using scarce resources to set up field units, increase ICU capacity and buy personal protective gear while banning non-emergency procedures, the latter of which cut revenues in half. Administrators mull whether they over-prepared ahead of an expected second surge in cases this fall, a prospect that many believe they are still not ready for.

COVID-19 pandemic-related actions have cost hospitals in the state as much as $14B forcing them to lay off thousands of workers.

The industry is asking Sacramento for $1B in aid to defray current costs and plan to request another $3B at the start of fiscal 2021 on July 1.

Statewide, hospitals have received $3.4B from the CARES Act, about 4% of the total.

Before the pandemic, 38% of California hospitals, public and private, were losing money and another 11% had near-zero operating margins.

Selected tickers: Humana (HUM +2.2%), HCA (HCA -1.1%), Universal Health Services (UHS -1.5%), Surgery Partners (SGRY +0.8%), Tenet Healthcare (THC +0.8%), Community Healthcare Systems (CYH +0.3%)

https://seekingalpha.com/news/3578340-california-hospitals-fighting-red-ink-after-preparing-for-covidminus-19-surge-never-came