The financial health of "swing hospitals" during the first COVID-19 outbreak

Area of Science:

• Health Economics
• Infectious Disease Management
• Hospital Administration

Background:

• Japanese hospitals had autonomy in admitting COVID-19 patients, leading to variable admission rates.
• Decisions on patient admission were often endogenous, particularly during the early pandemic.

Purpose of the Study:

• To estimate the financial impact of admitting COVID-19 patients on Japanese hospital profits.
• To analyze the endogenous decision-making process of hospitals regarding infectious disease patient intake.

Main Methods:

• Employed instrumental variable (IV) regression to address endogeneity in admission decisions.
• Utilized national government guidelines on hospital types for admitting COVID-19 patients as instrumental variables.

Main Results:

• Monthly profits per bed decreased by approximately JPY 600,000 (USD 4615) for hospitals admitting COVID-19 patients.
• This represents a 15-fold increase compared to the average monthly profit in 2019, indicating substantial financial losses.
• Results suggest that treating COVID-19 patients is financially detrimental for hospitals lacking suitability.

Conclusions:

• Admitting COVID-19 patients imposes significant financial burdens on certain Japanese hospitals.
• An alternative strategy is proposed for managing patient surges during future infectious disease outbreaks.