Impact of the COVID-19 pandemic on the financial performance of hospitals according to hospital characteristics in Korea: An observational study

Abstract

The coronavirus disease-19 (COVID-19) pandemic had a profound effect on society and various industries. Moreover, hospitals experienced huge financial losses owing to COVID-19 prevention efforts. This study aims not only to comprehensively inspect the financial impact of the pandemic on Korean hospitals but also to consider financial performance by hospital characteristics. Data were collected from 255 general hospitals that uploaded their income statements on the website, and 1530 data points were collected from 2016 to 2021. We used the paired t-test, linear mixed-effects (LME) model in R software (Ver. 4.3.2). We then selected operating margin ratio (OMR) and total margin ratio (TMR) to measure financial performance and used location, type of hospital, and ownership as hospital characteristics. We found that OMR and TMR worsened after COVID-19 breakout, and the labor and management cost ratios increased. According to the LME model with hospital characteristics, the OMR of hospitals located in the capital area worsened more than that of hospitals in noncapital areas (β5 = −6.3, P < .01). Regarding type of hospitals, tertiary general hospitals maintained a surplus and recorded a better OMR than general hospitals during the pandemic (β6 = 9.5, P < .01). The OMR of public hospitals worsened more than that of private hospitals during the pandemic (β7 = −25.4, P < .01), but the TMR of public hospitals increased compared to that of private hospitals (β7 = 3.9, P < .01). We confirmed that the COVID-19 pandemic had a negative impact on the financial status of hospitals. Considering hospital characteristics, the impact of the pandemic on hospital financial performance differed based on location, type of hospital, and ownership. As the contributions of this study, the government could establish support policies such as government subsidies based on hospital characteristics and hospital administrators could set a contingency plan to mitigate national disasters.