Winona (Minn.) Health reported a 3 percent operating margin last year boosted by federal pandemic funds. This year, the rural health system with a 49-bed hospital expects annual results to be much worse, according to the Star Tribune.
The health system's fiscal year began in October and the lack of federal funds compounded by workforce shortages limiting capacity and increased drug, supply and labor costs mean losses are likely to accelerate. Reimbursements aren't keeping up with increased costs, a situation hospitals around the country are facing, and the Winona is keeping patients too long because they're unable to discharge them into transitional facilities with capacity constraints.
Rachelle Schultz, president and CEO of Winona Health, told the Star Tribune she expects operating margins to hit negative 6 to 8 percent by the end of the 2023 fiscal year.
"I've never even seen something like this," she told the Star Tribune. "It gives me chest pains."
The Minnesota Hospital Association reported around 56 percent of hospitals and health systems in the state had negative operating margins last year, and around 22 percent of hospitalized patients have had discharge delayed.
Nationwide, the outlook for nonprofit hospitals is rather grim. Fitch Ratings said in a March 2 report nonprofit hospitals should expect the financial situation to get worse before it gets better, although some may return to break even this year. Labor shortages will keep wages high, according to the report, and margins are not expected to return to pre-pandemic levels for the foreseeable future.