Hospitals & Facilities

Hospital margins are looking strong, but experts warn the Change cyberattack could disrupt progress

Experts project the attack is costing providers $100 million per day.
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Healthcare Brew covers pharmaceutical developments, health startups, the latest tech, and how it impacts hospitals and providers to keep administrators and providers informed.

In a positive sign that hospitals are financially recovering from the pandemic, hospital margins continue to improve. But don’t do a happy dance yet: Experts warn there may be trouble ahead, primarily from the ongoing Change Healthcare cyberattack.

Hospital margins reached 3.96% in February, with most revenue coming from outpatient settings, according to consulting firm Kaufman Hall’s latest National Hospital Flash Report, which includes data from more than 1,300 hospitals.

However, that doesn’t reflect the cyberattack’s full effect, the firm’s analysts noted in the report.

“Robust hospital margins in February demonstrate continued recovery from the pandemic years, but challenges are on the horizon,” Erik Swanson, SVP of data and analytics at Kaufman Hall, said in a statement. “The aftermath of the Change Healthcare cyberattack and continued competition from industry disrupters may test financial performance in coming months, as disrupters capture more profitable, lower-acuity, and lower-capital-intense services from hospitals.”

The Change attack has had a massive financial effect on hospitals. Experts from digital health risk assurance firm First Health Advisory estimated the attack is costing healthcare providers $100 million daily, as Healthcare Brew previously reported.

“The attack raises broader issues of cybersecurity and cash flow management, which may have credit, balance sheet, and operational implications,” Kaufman Hall’s report stated.

To prepare for the cyberattack’s potential financial consequences, Kaufman Hall analysts recommend hospitals prioritize taking steps to preserve liquidity, “including extending accounts payable, slowing capital spending, drawing on lines of credit, or liquidating assets such as Treasurys,” the report stated.

Kaufman Hall analysts wrote in the report that they expect hospital rating agencies will have a “heightened interest” in cybersecurity in the future.

“Hospitals should pay special attention to how they are dealing with issues of cyber hygiene and the risk of potential contamination in interactions with third-party vendors and other partners,” the analysts wrote in the report.

Navigate the healthcare industry

Healthcare Brew covers pharmaceutical developments, health startups, the latest tech, and how it impacts hospitals and providers to keep administrators and providers informed.