Hot Financial Mess

On July 14th my fellow librarians and I spoke on the webinar, Facilities and Personnel Management While Your Library is Closed, Open, Reopening or Somewhere In-Between. In that webinar one of the things I briefly touched up on was library budget and the impact from covid-19.

Well, brace yourselves medical librarians and library vendors, because 2020 and 2021 are going to be a hot mess financially. So when we say we have no money, please know it is worse that the library has no money. We have no money means our funding agency, our institution and/or state literally has no money.

The only way I can easily discuss it is to break it into two parts, hospitals and universities/colleges. Many had financial problems prior to the pandemic. But all have been impacted financially by the coronavirus but in different ways.

Hospitals:
There had been a shift in recent years where smaller rural or urban, less profitable hospitals have been either bought by larger systems or were closed due to several financial reasons. So the idea that some hospitals have been losing money hasn’t been new. But now with the coronavirus even large previously financially healthy hospital systems have seen losses in the hundreds of millions to billions of dollars.

To sum up the articles listed above, and many others like them, major hospital systems are losing a lot of money due to the coronavirus. Smaller hospitals that were on financially unstable ground have been devastated financially. The AHA estimates that the net financial impact over a 4 month period will be $36.6 billion. Lost revenue from cancelled surgeries, additional costs associated with purchasing PPE, drug shortage costs, wage and labor costs, have all compounded to make it so EVERY hospital in America is losing a lot of money.

The hospitals have second problem related to COVID-19. As millions of Americans lose their jobs they lose their healthcare benefits. That means as people lose their health insurance they won’t be going to doctors, clinics or the hospitals for procedures. They will put it off. And if these unemployed people are in one of the 13 states that did not expand Medicaid under the ACA, that means those unemployed can’t even get health insurance under Medicaid. This translates to even less procedures and money for hospitals at a time when they need it.

University and Colleges:
Like hospitals, there has been a downward financial trend for some universities and colleges that was related to the shrinking number of high school students entering college. The generation following the millennials is significantly smaller. Many colleges had hoped to supplement this downward demographic trend with international students. However, that became problematic as a result of government policies.

The authors of the NBCNews.com article, “A Crisis is looming for US colleges – and not just because of the pandemic” and researchers from The Hechinger Report, used financial data from 2009-2018 and identified more than 500 colleges or universities with warning signs of financial stress, prior to the pandemic. Ohio and Illinois have most institutions in financial jeopardy. Many of the state institutions have NOT climbed back to funding levels prior to the 2008 Great Recession. *Note this data is PRIOR to the coronavirus, the pandemic has exacerbated these 500 colleges financial woes AND has cause financial losses to the rest who are/were financially sound.

Again to summarize the articles above, the coronavirus is impacting more than just revenue from tuition dollars. Colleges and universities were faced with spring room and board refunds. If students cannot return to campus and must do elearning, colleges must still pay the heating, electrical, and other maintenance things that student housing dollars paid for. Disillusioned with spring elearning, many students are reluctant to continue paying tuition to their institution, and electing to do a gap year or get pre-requisite course at their community college for less money.

Then you have sports. Because the NCAA basketball tournament was cancelled, schools and conferences that participated in the tournament lost 62% of $600 million to be dispersed to the schools and conference. If football is cancelled (and it is looking more and more like it will be) that is a possible $4 billion in revenue that will be lost. You may think well that is less money the institutions have to shell out to support sports at the expense of academic and if you are, you are missing a big piece of the financial pie. That is hundreds of millions of dollars that were being distributed to schools that is suddenly gone. Yet the schools are still on the hook for student athlete scholarships, heating, electricity, maintenance of the facilities. IF the school is not one of the 23 public NCAA athletic programs that is considered self sufficient, then that loss of financial support is a double whammy.

What this all boils down to is hospital and academic medical libraries are in a significantly worse financial position than they were in recent years. I am not a financial analyst but I would venture to say that it will be worse than the 2008 Great Recession. It is estimated that roughly $200 billion will be lost from states by June of next year. It is unlikely there will be much support from the state either.

So don’t be surprised if librarians are saying they don’t have any money. They don’t. Now is the time for vendors and librarians to work together to weather this financial storm. Both must be willing to negotiate renewal costs and think creatively. Consider multi-year agreements that have 0% renewal or a cut in price, that can gradually increase in subsequent years. Understand that some very well used resources may still need to be cut. Even if every library resource had 0% renewal price for 2021, but the library has a 20% budget cut, something will have to get cut. Librarians, work with your administration to help them understand if a multi-year agreement is beneficial. Vendors, I am not asking you to go bankrupt (that doesn’t help you or us) but please start thinking out of the box as to how we both can financially afford to be in business together, which might mean less profit in 2021. BTW deferring a full price bill that is due Jan 2021 for April 2021 is NOT help. Our budgets are set for the WHOLE year, so if I don’t have the money to pay your bill in January, I sure as hell won’t have it in April.

We are in for a hot financial mess for 2021 and 2022. Let’s all try to figure this out together so that we have something to build from in the future.

One thought on “Hot Financial Mess”

  1. I am seeing most of my serials vendors announcing any “inflationary” cost increases to 2022.

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