Impact of COVID-19 on the Financing of the Healthcare Sector
Healthcare financing encompasses the generation, use, and allocation of financial resources. According to WHO, healthcare financing is integral to healthcare operationalization as it is the only guarantee for enhancing health coverage and addressing health disparity and inequities (Gadsden et al., 2022). Central to health financing is revenue collection, purchasing of healthcare resources, payment, and pooling of healthcare resources. These functionalities were significantly affected by the pandemic. In these unprecedented times, when the global emphasis on health is increasingly skewing towards quality enhancements and convenience, this pandemic questioned healthcare systems’ readiness and ability to handle catastrophic biological emergencies. This paper details the impact of the COVID-19 pandemic on the financing of the healthcare sector.
Impact of the Covid-19 Pandemic on the Financing of the Healthcare Sector
Impact on Revenue Collection
Revenue collection is an essential component of healthcare financing. It details all sources of funds utilized for healthcare services, how they are collected, and all contribution structures involved. Covid 19 questioned the sustainability and equatability of the global revenue collection systems and the feasibility of alternative findings sources such as donorship and out-of-pocket payments.
Revenue collection in hospitals across the U.S. and abroad dipped significantly during the pandemic. The American Hospital Association estimates revealed that the financial impact of the pandemic was evident across the American healthcare systems, with hospitals losing upwards of 200 billion dollars (AHA, 2021). These losses were mainly due to reduced hospital visitations. At the height of the pandemic, hospitals moved to cancel or delay non-essential medical, dental, and surgical procedures. At the same time, many people had forgone healthcare, including specialty care visits and primary care, due to restrictions on movement and the fear of the disease. While these served to concentrate healthcare services to address the pandemic, it negatively affected revenue collection in these hospitals. The consequent reduction in hospital visitations and consumption of healthcare resources translated to low insurance remittances and out-of-pocket contributions to healthcare funds.
Healthcare expenditures in the U.S. are financed by a complex mixture of individuals, private insurance, and public payments. The Covid-19 pandemic questioned the sustainability and equability of this model. Many Americans were on the brink of poverty when social and economic disruptions were apparent during the pandemic. Job losses that proceeded with movement restrictions and reduction in disposable income translated to reduced funds available for out-of-pocket healthcare resource consumption. While this affected many, the marginalized groups were disproportionately affected. Wang et al. (2023) note that the economic and social disruptions attributable to the pandemic unearthed the considerable vulnerabilities of the American healthcare systems to take care of the impoverished. It pointed to how this model is unsustainable in the pursuit to better the health of all communities through the guarantee of indiscriminate care. To date, low-income communities in the U.S. are still suffering from the impact of this pandemic. Their recovery is particularly slower, making them more vulnerable to other health threats. For these reasons, reviewing the American healthcare financing model is warranted.
Losses in revenue collection that characterized the COVID-19 pandemic also influenced the cost of healthcare. Li et al. (2023) note that the loss in revenue collection across healthcare facilities in the U.S. was followed by a sharp increase in healthcare costs. At the height of the pandemic, there was a surge in hospitalization, with the majority being Medicare-aged individuals. Additionally, hospital capacities were stretched, with many having limited to no extra bed spaces. These COVID-19-related hospitalizations were associated with extremely escalated costs of management. Estimates placed the average cost of managing this disease to be over 20,000 for patients in no need of a ventilator and over 38,000 dollars for patients requiring ventilatory support. This is higher than the estimates for the amount covered by many commercial coverage. With the uninsurance rate having increased at the same period accustomed to the increases in unemployment rates, the number of uncompensated care grew, further contributing to the loss of resources.
Impact on Hospital Operationalizations and Utilization of Funds
Healthcare facilities serve the role of providing healthcare to the public. Their resolve to better community health is centered on their ability to raise and utilize funds for these processes. Integral to effective and quality healthcare operationalizations are healthcare workers. During the pandemic, healthcare workers were at the front lines of battling this public health emergency. This, however, had a toll on their physical and psychological health. To uphold the high level of healthcare in the U.S. and abroad, healthcare facilities resorted to supporting front-line healthcare workers. This included availing various support systems such as counselors to these caregivers, transportation to and from work, COVID-19 screening, and others. These processes fetch significant financial considerations. AHA (2021) notes that in the wake of the pandemic, many hospitals in the U.S. incurred costs to ensure that their staff, and their families are cared for and protected from the health impacts of the disease. While this helped in optimizing the functionality of these caregivers, it dented the financial reserves of these healthcare facilities. It also restricted the ability of these facilities to invest in other quality enhancement measures.
Impact on the Purchase of Healthcare Services
The purchasing functionality of healthcare systems is broad. It encompasses the user fees and line item budget, including resources required to deliver healthcare. Rhodes et al. (2023) note that the pandemic was associated with the increased cost of medications, medical equipment, hospital beds, and healthcare resources. These increases were attributed to disruption in the global supply chain. With increasing demand, the prices of essential equipment such as PPEs, ventilators, and face masks rose exponentially. This translated into a high cost of healthcare purchasing. Whereas this was reflected in the diminishing financial reserves of various hospitals, the users also felt it. Governments also had to step in to cushion communities from this escalated healthcare cost. This was evident across many countries in the form of subsidies. In the U.S., the Covid-19 economic relief fund served a similar purpose. It cushioned healthcare consumers, the American public, and other organizations from the impact of the pandemic.
Overstretching in healthcare facilities was another issue during the pandemic that negatively impacted the cost of healthcare labor and, subsequently, financing. Many facilities worldwide were forced to increase their overtime costs as a hospitalization surge was witnessed. Some facilities moved to introduce bonuses to their caregivers to address shortages and the increasing provider-to-patient ratio. This also affected these hospital’s finances.
Conclusively, the Covid-19 pandemic had a considerable impact on healthcare financing. It affected specific aspects of healthcare financing, such as revenue collection, utilization of financial resources, and the cost of healthcare in its entirety. As evident above, the pandemic caused economic and social disruptions that had a spiraling effect on revenue collection. It also unearthed the traditional problems of healthcare inequities in marginalized communities.
References
AHA. (2021). Hospitals and health systems face unprecedented financial pressures due to COVID-19: AHA. American Hospital Association. https://www.aha.org/guidesreports/2020-05-05-hospitals-and-health-systems-face-unprecedented-financial-pressures-due
Gadsden, T., Ford, B., Angell, B., Sumarac, B., de Oliveira Cruz, V., Wang, H., Tsilaajav, T., & Jan, S. (2022). Health financing policy responses to the COVID-19 pandemic: A review of the first stages in the WHO Southeast Asia region. Health Policy and Planning, 37(10), 1317–1327. https://doi.org/10.1093/heapol/czac071
Li, K., Al-Amin, M., & Rosko, M. D. (2023). Early financial impact of the COVID-19 pandemic on U.S. hospitals. Journal of Healthcare Management, 68(4), 268–283. https://doi.org/10.1097/jhm-d-22-00175
Rhodes, J. H., Santos, T., & Young, G. (2023). The early impact of the COVID-19 pandemic on hospital finances. Journal of Healthcare Management, 68(1), 38–55. https://doi.org/10.1097/jhm-d-22-00037
Wang, Y., Bai, G., & Anderson, G. (2023). U.S. hospitals’ administrative expenses increased sharply during COVID-19. Journal of General Internal Medicine, 38(8), 1887–1893. https://doi.org/10.1007/s11606-023-08158-8
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Impact of COVID-19
Please write 4-5 pages on the impact of Covid-19 on the financing of the healthcare sector.