Amid the COVID-19 pandemic, it is nearly impossible to find a healthcare article that isn’t examining the impact of the virus and how the US healthcare system will emerge in the next couple of years. However, there are other trends hinting at what health systems may expect in the near future.

The tip of the iceberg is the degree of financial impact to health systems this year. In a recent report, Kaufman Hall’s National Hospital Flash Report, the authors share that hospital operating margins are down just 28% from the same time last year. However, if the infusion of cash from the CARES Act is removed, those same operating margins, for the more than 800 hospitals included in the report, truly decreased by as much as 96%. Additional impacts to hospitals’ and health systems’ bottom lines are also being driven from both public and private payers. A recent federal appeals court ruling upheld a nearly 30% reduction in 340B reimbursement from HHS. And commercial payers are increasingly pushing patients who use high cost specialty infusion from hospital outpatient centers toward lower cost alternative sites of care.

As hits on operating revenue continue, the multi-year trend of hospital and health system consolidation will only accelerate. The effects from consolidation on the number of primary care practices, community health centers, rural hospitals, independent small-to-moderate-size hospitals, and inner-city safety net hospitals could create severe gaps in care or make existing gaps worse. The number of financially vulnerable hospitals and practices will be significantly reduced, either by closing their doors or being forced into merging with strong local health systems. In this respect, the large health systems will continue to grow larger and more dominant in local markets, potentially providing additional leverage to negotiate higher prices from payers and deeper discounts from pharmaceutical manufacturers.

The net effect from the loss of these hospitals, health centers, and community practices will further create and accelerate disparities in those areas of society already most vulnerable. Both IDNs and payers have expressed interest in collaborating with pharmaceutical manufacturers in addressing population health management challenges. To help patients continue to have access to care, manufacturers can work with payers, health systems, and IDNs to provide resources to reach patients in the communities they serve. Consider developing digital tools that can be provided to patients through email or on a payer or provider website. The shifting paradigm toward less in-person care needs to be top of mind in the development of tactics to reach patients effectively moving forward.


  1. Fierce Healthcare. Hospital operating margins down 28% through July: report. Accessed August 27, 2020.
  2. Fierce Healthcare. Appeals court upholds nearly 30% payment cut to 340B hospitals. Accessed August 27, 2020.
  3. Harvard Business Review. 3 Scenarios for How the Pandemic Could Change U.S. Health Care. Accessed August 27, 2020.
  4. Frontiers in Public Health. Impact of Social Determinants of Health on the Emerging COVID-19 Pandemic in the United States. Accessed August 27, 2020.