Margin

Hospitals across the country saw a downturn in margin results to start the calendar year. Operating Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) Margin was down -23.8 basis points (bps) year over year in January, but was 14.3 bps above budget expectations. Operating Margin was down -23.3 bps year over year, but also was above budget.

Looking at month-over-month results, Operating EBITDA Margin was down -68.7 bps, while Operating Margin was down -37.1 bps. The margin decreases occurred despite increased volumes for the month, and were largely driven by increased expenses, coupled with some revenue declines.

Volume

The nation’s hospitals saw increases across most metrics in January, but most metrics fell below budget. Discharges were up 2.5 percent year over year and 3.8 percent month over month, but fell -3.3 percent below budget. Adjusted Discharges rose 4.0 percent year over year and 3.4 percent month over month, but were -1.4 percent below budget.

Adjusted Patient Days increased 2.1 percent over January 2019 and 3.1 percent over December 2019. Average Length of Stay was the only volume metric to see a slight year-over-year decline of -0.9 percent, while Emergency Department Visits saw the biggest year-over-year increase of 4.1 percent and Operating Room Minutes were up 2.0 percent.
 


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Revenue

Revenue performance was mixed for January year over year, but declined across all metrics month over month. Net Patient Service Revenue (NPSR) per Adjusted Discharge saw no change year over year, but was down -1.2 percent month over month. NPSR per Adjusted Patient Day rose 1.8 percent year over year, but fell -2.5 percent month over month.

The Inpatient/Outpatient (IP/OP) Adjustment Factor saw a 2.1 percent increase compared to January 2019, but was down -0.4 percent compared to December 2019. Bad Debt and Charity as a Percent of Gross declined -0.4 percent year over year and -2.5 percent month over month.

Expense

Hospitals nationwide saw year-over-year increases across most expense metrics in January, but across-the-board decreases month over month. Total Expense per Adjusted Discharge rose slightly 0.6 percent year over year, but decreased -1.5 percent month over month.

Labor Expense per Adjusted Discharge was up 1.3 percent compared to January 2019, but down -0.3 percent month over month. Full-Time Equivalents per Adjusted Occupied Bed was the only metric to see a year-over-year decline at -3.0 percent.

Non-Labor Expense per Adjusted Discharge rose 1.1 percent year over year, and dipped -0.8 percent month over month. Drug Expense per Adjusted Discharge saw the biggest year-over-year increase at 2.3 percent, while Supply Expense per Adjusted Discharge rose 1.8 percent and Purchased Service Expense per Adjusted Discharge rose 1.4 percent.

Non-Operating

January was a choppy month on Wall Street. Equities performed well to begin the year, with the S&P 500 hitting an all-time high on January 22. However, concerns about the coronavirus outbreak hit stocks hard, sending markets lower in late January.

The Federal Reserve kept rates unchanged. Minutes from the January meeting indicate no rate changes in 2020, as members take a wait-and-see approach. However, financial markets are pricing in at least one rate cut this year, with futures prices indicating a 24.4 percent chance of a cut in March. U.S. labor markets remained strong in January, with 225,000 jobs added and a 3.6 percent unemployment that remains near the 50-year low—both signs of continued strength for the economy.

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