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Pandemic Flu Would Have Severe Financial Consequences for Hospitals

Hospital Losses Could Approach $4 Billion

DECEMBER 5, 2007 – Baltimore, MD – The U.S. Department of Health and Human Services estimates that a severe flu pandemic could result in as many as 90 million people becoming infected and 9.9 million needing to be hospitalized. Given that there are only a million hospital beds in the country, it seems clear that hospitals would soon be overwhelmed.

HHS has suggested that hospitals will have to postpone elective procedures to free up capacity for flu patients. But what impact would this have on the finances of hospitals, many of which already operate on tight budgets?

Researchers from the Center for Biosecurity of the University of Pittsburgh Medical Center explore these issues in an article, “Financial Effects of an Influenza Pandemic on U.S. Hospitals,” published in the Journal of Health Care Finance. Jason Matheny, MPH, MBA, Eric Toner, MD, and Richard Waldhorn, MD, offer the first analysis to estimate the financial effects of such a pandemic on U.S. hospitals, including the costs of deferring elective admissions and the costs of providing uncompensated care for uninsured patients.

Using U.S. federal pandemic planning assumptions and national data on healthcare costs and revenues, the authors estimated that a severe pandemic would cause U.S. hospitals to absorb a net loss of around $4 billion. Some hospitals may not have sufficient cash on hand to cover their losses and would risk insolvency.

The authors concluded that hospitals should include financial personnel in pandemic planning. At the same time, federal policymakers should consider contingencies to ensure that hospitals do not become insolvent as a result of a pandemic.

“Financial Effects of an Influenza Pandemic on U.S. Hospitals,” by Jason Matheny, MPH, MBA, Eric Toner, MD, and Richard Waldhorn, MD, appears in the Journal of Health Care Finance. It can be viewed at: http://www.healthbusinessandpolicy.com/Documents/JHCF_MATHENY_34_1_07_058_063.pdf.

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The Center for Biosecurity of the University of Pittsburgh Medical Center (UPMC) works to prevent the development and use of biological weapons, to catalyze advances in science and governance that diminish the power of biological weapons as agents of mass destruction, and to lessen the human suffering that would result if prevention fails.

 

 

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