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With Hospitals Drawing Credit Lines to Finance COVID-19 Stress, A Look Back

Updated: Apr 15, 2020

Hospitals across the U.S. have been put under tremendous stress at a multitude of levels as COVID-19 has gone into communities nationwide. With operations stretched, unforeseen and extensive additional costs being incurred, and the key revenue streams from elective and routine medical procedures curtailed, many hospitals are needing to shore up balance sheets via credit lines and other sources of quick liquidity.

As it turns out, many of the same indicators of potential COVID-19 financial stress - certain pre-existing health conditions, affluence, age, prevalence of health insurance, and other demographics - align with historical financial stress factors for hospitals.

Principal component analysis using all our catchment area demographic, socioeconomic and health condition data which we did to see if there were patterns associated with 77 hospital bankruptcy declarations or distressed asset sales dating back to 2015. The short answer is yes, and that those patterns would theoretically allow for analysis of the entire cohort of 7500 US hospitals we’ve captured. Even using two of the composite variables increases the prediction of financial distress by a 2.5x multiple.

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