Report reflects challenges for U.S. health systems at start of 2021
The first month of the new year proved challenging for hospitals and health systems nationwide as the effects of the pandemic continued to push margins, volumes, and outpatient revenues below prior year performance, according to the latest issue of Kaufman Hall’s National Hospital Flash Report, announced the company in a news release.
National COVID-19 metrics showed signs that the virus’ impacts may be easing following a devastating winter surge, with key pandemic indicators peaking in early to mid-January but tapering in the second half of the month. U.S. hospitals and health systems, however, face a long road to recovery.
The median Kaufman Hall hospital Operating Margin Index was –0.6 percent in January, not including federal Coronavirus Aid, Relief, and Economic Security (CARES) Act funding. With the funding, it was –0.1 percent. The median Operating Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) Margin was 4.0 percent without CARES and 4.8 percent with CARES. Not including the federal aid, Operating Margin fell 46.1 percent (4.6 percentage points) and Operating EBITDA Margin was down 34.1 percent (4.2 percentage points) compared to January 2020.
Volumes fell year-over-year across most metrics as many healthcare consumers continued to avoid or delay care. Year-over-year, Adjusted Discharges fell 17.6 percent, Adjusted Patient Days declined 8.3 percent, and Operating Room Minutes fell 16.6 percent.
Emergency Department Visits—which have seen double-digit year-over-year declines each month since the start of the pandemic in March 2020—again had the biggest drop compared to other volume metrics at 24.7 percent. Inpatient volumes fell 2.3 percent year-over-year following two months of increases from rising COVID-19 hospitalizations. Even so, hospitals continue to see higher Average Length of Stay due to higher acuity patients.
Outpatient Revenue fell below prior year levels for the ninth time in the past 10 months, down 10.4 percent compared to January 2020. The lower outpatient revenues pushed Gross Operating Revenue (not including CARES) down 4.8 percent year-over-year, while total Inpatient Revenue increased just 1.3 percent year-over-year.
Total expenses continued to rise as hospitals bore the high costs of labor, drugs, personal protective gear, and other equipment needed to treat sicker patients, including COVID-19 cases. Total Expense per Adjusted Discharge rose 25.4 percent, Labor Expense per Adjusted Discharge jumped 30.1 percent, and Non-Labor Expense per Adjusted Discharge increased 24.4 percent compared to the same period last year.
