Most Rural Hospitals Have Little Cash Going into COVID

Date
05/2020
Description

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 are canceling elective procedures and some routine care to ensure capacity for COVID-19 patients. Canceling services results in a large amount of lost revenue for many hospitals. A hospital's ability to overcome periods of time with diminished cash flows depends on the amount of cash, marketable securities, and other assets that can be readily converted to cash. Many rural hospitals have a history of low cash levels and other short-term assets and are therefore ill-prepared for the loss of revenue during the pandemic. Based on recent cost report data, rural Prospective Payment System 26-50 bed hospitals had a median of only 21.3 days cash on hand, and rural Medicare Dependent Hospitals hospitals had a median of only 28.4 days cash on hand prior to the onset of COVID-19 in the U.S.

Center
North Carolina Rural Health Research and Policy Analysis Center