Hospitals across the U.S. have been busy sending banks requests for new lines of credit as they face thin revenue streams from having to eliminate all but the most essential services for the coronavirus outbreak, according to a Bloomberg report.
The problem isn’t specific; both large hospitals in the middle of the worst parts of the country’s pandemic and smaller ones in more rural areas have felt the financial burn as of late. They’re all arranging new facilities or drawing from existing ones to try to stay afloat financially, looking for easy access to funds.
The hospitals’ efforts underline the possibility that even the federal stimulus’ $100 billion in aid won’t be enough to offset the tremendous disruption and costs of the pandemic. Hospitals have drawn over $1.3 billion in existing lines of credit so far, according to statistics from Bloomberg. There have been about another $1 billion in credit lines arranged, as well.
Eric Jordahl, a managing director at healthcare advisory firm Kaufman Hall, said hospitals had become “overwhelmed” with the requests and that access was contracting while prices went up.
Nonprofit hospitals, which don’t use lines of credit most of the time, have begun using them in lieu of liquidating investments amid the year’s selloffs, according to Regions Bank’s Mike Mauldin. Mauldin added that the bank’s nonprofit clients had been requesting credit lines between $10 million and $250 million to help offset turmoil for the next few months.
And because of the mass requests for funding, smaller banks that don’t have the same balance sheets as their larger counterparts will likely face issues.
Some hospitals in places like New York City have faced a tremendous deluge of demands due to the virus. But others in areas without huge outbreaks of the virus have seen revenues declining because of social distancing measures and recommendations that everyone stay home to avoid spreading the virus.