COVID-19's financial impact on New Jersey hospitals has reached "historic levels," with nearly 60% of providers reporting negative net margins throughout the first half of the year as a result of the pandemic.
A mid-year snapshot of financial data released Friday by the New Jersey Hospital Association found providers statewide experienced significant declines in both patient volume and revenue compared to the same time last year.
Between Jan. 1 and June 30, New Jersey hospitals' total patient revenues dropped by 6.6% compared to 2019, while emergency department cases decreased by 23%, outpatient visits declined 22%, and overall admissions fell by 8%.
Revenue and volume declined while hospitals experienced a 12% increase in total expenses compared to 2019, all of which resulted in the average operating margin statewide falling from 3.7% for the first half of last year to negative 4% in 2020.
"COVID-19's fiscal impact on our hospitals reaches historic levels," Sean Hopkins, senior vice president of the New Jersey Hospital Association's Center for Health Analytics, Research and Transformation, said in a statement.
As of Friday, New Jersey reported more than 206,000 coronavirus cases and more than 14,000 deaths since the beginning of the pandemic, according to the state's Department of Health.
More than 23,000 New Jerseyans have been hospitalized for COVID-19 as of Oct. 1. Overall, the state has the ninth highest coronavirus incidence rate in the country.
Hospitals' response to the pandemic was cited as the key factor for the financial decline. Most hospitals allocated resources to treat COVID-19 cases by increasing staffing levels and purchasing extra supplies of personal protective equipment, ventilators and medications all while scaling back on performing revenue-generating procedures like elective surgeries.
The analysis found New Jersey hospitals performed the six most common elective procedures an estimated 4,300 times in April and in May of 2019. A state executive order suspended all non-essential procedures from March 27 through May 6, and those common procedures plummeted to just 400 conducted statewide in April and May 2020.
Although New Jersey healthcare providers received $3.8 billion in CARES Act funding relief, they can only spend that money on strictly limited COVID-19 related expenses.
"When accounting for the long-term impact of COVID-19, the greatest cost of all may be the impact on the health and well-being of residents who delayed seeking necessary care," Cathy Bennett, president and CEO of the New Jersey Hospital Association, said in a statement.
Other providers across the country are facing similar financial struggles. An American Hospital Association report released in May estimated hospitals and health systems could take a $200 billion financial hit between March and June due to the pandemic.
As restrictions on elective procedure have eased, many hospitals may still find it difficult to attract patients to come back to their facilities out of fear of contracting COVID-19.