New Reports Show Virginia Hospitals Yield $60 Billion in Positive State Economic Impact Despite Workforce Shortages, Financial Headwinds, and the Unique Challenges Facing Rural Hospitals
January 9, 2023
The 2023 Annual Report on Community Benefit and the 2023 Virginia Rural Hospital Report Highlight the Economic and Public Health Benefits Virginia Hospitals Provide for Communities as well as the External Threats they Face
RICHMOND, VA – Virginia hospitals and health systems provided $3.1 billion in community support to the Commonwealth in 2021 and generated more than $60 billion in positive economic activity across the state, according to the newly released 2023 Annual Report on Community Benefit from the Virginia Hospital & Healthcare Association (VHHA). At the same time, many Virginia hospitals, including several serving rural communities, continue to face significant financial challenges, as chronicled in the 2023 Virginia Rural Hospital Report.
Even during a global pandemic and the resulting financial fallout for health care providers, Virginia hospitals continued to serve as essential providers of health care services and economic anchors for communities throughout the Commonwealth. The data shows that hospitals provided more than $3 billion in community support in the form of uncompensated care, community investments, taxes, and more. Among other items, that includes:
- $954 million in government payment shortfalls due to the difference between Medicare and Medicaid reimbursements and the actual cost of care;
- $411 million in charity care, which includes the cost of free and discounted care to serve individuals who cannot afford to pay for care;
- $207 million for means-tested programs and subsidized health services, and $390 million in bad debt for services not paid in full by a patient or third-party payer;
- $415 million to cover the state share of Medicaid expansion costs enabling hundreds of thousands of Virginians to gain health care coverage; and
- $230 million in community health investments.
Virginia hospitals also directly employ 120,900 people, accounting for $11.3 billion in wages and benefits, and hospitals’ presence support 242,000 additional skilled jobs in the state. In all, hospitals accounted for more than $60 billion in economic activity for the Commonwealth in 2021. Virginia hospitals in 2021 made those abundant contributions while also handling the vast majority (88.2 percent) of total state voluntary and involuntary behavioral health inpatient hospital admissions, accommodating 3.4 million emergency department visits, accepting more than 754,000 inpatient admissions (accounting for 4.4 million patient days), delivering nearly 88,000 babies, and throughout the pandemic treating and discharging nearly 132,000 COVID-19 patients.
“In good times and bad, hospitals are there for people in the communities they serve,” said Peter Mulkey, Clinch Valley Health CEO and Chair of the VHHA Board of Directors. “The 2023 Annual Report on Community Benefit exemplifies a few of the many ways in which hospitals provide essential care and make indispensable contributions to the health and prosperity of Virginia and its people.”
While hospitals provide immense benefits, they also face significant challenges. This is particularly true for rural hospitals that often serve less populous, more geographically isolated communities and have a patient payer mix comprised of individuals who tend to be older, sicker, poorer, and of lower socioeconomic means who heavily rely on Medicaid or Medicare, government programs that reimburse below the cost of providing care. Rural hospitals also face challenges in recruiting and retaining health care professionals, particularly amid pandemic-related staff burnout conditions.
The 2023 Virginia Rural Hospital Report highlights both the many public health and economic contributions the 28 rural hospitals in the state make as well as some of the challenges they face, including the fact that more than one-fourth of rural Virginia hospitals (26 percent) had negative operating margins in 2021. Nearly one-third of rural Virginia hospitals (32 percent) operated in the red in 2020. Rural hospitals are experiencing these challenges as the national hospital sector continues to deal with the impact of COVID-related revenue losses, lower patient volumes, substantial cost increases, and staffing shortages.
Virginia has more than 11,000 hospital job openings listed at the On Board Virginia website. Many hospitals have incurred significant new costs to bring in contract clinical professionals to help offset staffing challenges; hospitals in Virginia experienced a combined 154 percent increase in contract labor costs between Jan. 1, 2021-June 30, 2022. Meanwhile, many hospitals throughout 2022 continued to face negative operating margins and difficult financial conditions, according to Kaufman Hall, a national health care consulting firm.
“Virginia hospitals and their staff have shown incredible resilience during extraordinarily trying circumstances,” added VHHA President and CEO Sean T. Connaughton. “Our hospitals will continue to be beacons of hope to people in need. But we cannot ignore the data telling us clearly that more must be done to support hospitals, including those serving rural communities, through the financial and workforce challenges they continue to face because hospitals are essential to public health and integral to a vital society.”
About VHHA: The Virginia Hospital & Healthcare Association is an alliance of 110 hospitals and 25 health delivery systems that develops and advocates for sound health care policy in the Commonwealth. Its mission is to achieve excellence in both health care and health to make Virginia the healthiest state in the nation. Its vision is through collaboration with members and stakeholders, to ensure the sustainability of Virginia health care system, transform the delivery of care to promote lower costs and high value across the continuum of care, and to improve health for all Virginians. Connect with VHHA through Facebook, Twitter, Instagram, LinkedIn, and YouTube.
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