In the infographic, Most Rural Hospitals Have Little Cash Going into COVID, The North Carolina Rural Health Research Program uses recent Medicare Cost Report data to illustrate the type of rural hospitals most likely to struggle financially during the pandemic as measured by lower median days cash on hand. Days cash on hand is a common measure of an organization’s level of cash resources. It is an estimate of the number of days an organization could operate if no cash were collected or received.
Acute care hospitals have lower revenue because elective procedures and some routine care are being canceled to ensure capacity for COVID-19 patients. Many also face higher expenses because of supplies, equipment, and staff required for COVID-19 patients. A hospital’s ability to get through periods of diminished cash flow depends on the amount of cash, marketable securities, and other assets that can be readily converted to cash. Many rural hospitals have low cash levels and may struggle to get through the current cash crunch.
Based on recent cost report data, rural Prospective Payment System (PPS) 26-50 bed hospitals had a median of only 21.3 days cash on hand and rural Medicare Dependent Hospitals (MDH) hospitals had a median of only 28.4 days cash on hand prior to the onset of COVID-19 in the United States. These hospitals are the most likely to be the first to have a cash crunch.