The COVID-19 pandemic has taken a heavy toll on communities and businesses around the globe. Needless to say, the healthcare and travel industries — both of which locum tenens involves — have been among those most affected over the past year-and-a-half.
COVID-19 Continues to Challenge Healthcare
On September 21, the American Hospital Association (AHA) released a report by KaufmanHall & Associates predicting US hospitals will lose an estimated $54 billion in net income this year, despite the infusion of federal relief funds from The Consolidated Appropriations Act of 2021.
The report, titled Financial Effects of COVID-19: Hospital Outlook for the Remainder of 2021, cites “higher labor and other expenses and sicker patients” related to the ongoing COVID-19 pandemic as primary factors affecting hospitals’ financial health.
“With cases and hospitalizations at elevated levels again due to the rapid spread of the Delta variant, physicians; nurses and other hospital caregivers and personnel are working tirelessly to care for COVID-19 patients and others needing care,” AHA President and CEO Rick Pollack said. “At the same time, hospitals are experiencing profound headwinds that will continue throughout the rest of 2021.”
More than a third of hospitals (35%) are expected to end 2021 with negative margins, the AHA said in introducing the report. Before the pandemic, about a quarter of hospitals had negative margins, according to a March 25, 2021, article by Healthcare Finance Associate Editor Jeff Legasse.
More Federal Funds on the Way
On September 10, the US Department of Health and Human Services announced it will distribute $25.5 billion in COVID-19 relief funds to healthcare providers. This includes $17 billion in a “Phase 4” distribution from the Provider Relief Fund, as well as the $8.5 billion in American Rescue Plan Act funds designated for rural providers. Providers will apply for both sets of funds through a single application process, which will open Sept. 29.
Hospitals were projected to lose some $323 billion last year, according to the American Hospital Association (AHA). And the trend continues.
According to KaufmanHall, “Hospital margins are expected to remain close to Q2 performance, shifting only slightly to 10% and 11% below pre-pandemic levels in Q3 and Q4, respectively. However, it is important to note that these projections do not factor in recent increases in COVID-19 cases from the Delta variant, which could drive margins even lower in the second half of the year. Our projections reflect margin deficits that will inhibit hospitals’ ability to invest in growth or additional community services throughout 2021.”
Air Travel Market Recovery Remains Fragile
Meanwhile, the International Air Transport Association reported that air travel collapsed by 66% in 2020, returning to 1998 levels. After experiencing a net profit loss of $126.4 billion in 2020, the international air transport industry forecasts net (post-tax) losses at $47.7 billion for 2021 — roughly 38% of 2020 financial losses.
In a July 7, 2021, presentation entitled, COVID-19 Air Travel Update: Optimism with Caution, IATA Senior Economist Ezgi Gulbas said, “Global air travel, measured by passenger-kilometers flown, has been recovering since March, but it is very slow, and global RPKs are still 62.7% down compared to the pre-crisis level in May 2019.” Gulbas noted that a concurrent rebound in consumer confidence, critical to air travel’s recovery, is restrained by the strict travel restrictions currently in place. As of about a year ago, some 400,000 airline workers had been fired, furloughed, or told they might lose their jobs because of the coronavirus, according to Bloomberg calculations
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