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Monday, August 2 • 10:45am - 12:15pm
1C1 The Financial Impact of COVID-19 on Publicly Traded Health Systems

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Junying Zhao, University of Oklahoma Health Sciences Center; Tejas Ghirnikar, University of Oklahoma

How did the COVID-19 pandemic impact the healthcare industry? Us-ing 2015Q1–2020Q3 financial data of 26 publicly traded health systems, consisting of 11,322 hospitals and facilities, we find that the COVID-19pandemic shock is associated with large losses of revenue and profit, as well as increases in debt and cash holdings. Our time series analysis finds the trends of key financial indicators. After the pandemic onset, healthcare corporations’ financial viability and profitability worsen, while their liquidity and short-term debt grow in response to a gloomy and uncertain future. Our panel data analysis shows a 21.9% significant decrease in net operating revenue, a 16.9% significant increase in current liabilities, and an insignificant increase in long-term liabilities. Concurrent with these results, we find that an average healthcare corporation suffered $30.6 million significant losses in net income per quarter in 2020. The extent of the negative financial impact on providers varies with the CARES Act fiscal aid. The aid reduces the median provider’s revenue loss, funds some individual providers that incurred no revenue loss (e.g., Option Care Health Corp.) but does not fund others that suffered up to38.5% revenue loss (e.g., Magellan Health Corp.) and 56.4% profit loss (e.g., Encompass Health Corp.) in 2020Q2, compared to 2019Q2. With depleting temporary CARES Act aid and skyrocketing national debt, our results warn policymakers of the financial unviability of the healthcare industry, whose services are most needed during successive waves of the theCOVID-19 pandemic.

Discussant
avatar for Anastasia Ivantsova

Anastasia Ivantsova

University of Calgary

Presenters
JZ

Junying Zhao

University of Oklahoma Health Sciences Center



Monday August 2, 2021 10:45am - 12:15pm EDT

Attendees (9)