The first month of 2022 was devastating for hospitals and health systems nationwide as they were hit full force by the Omicron tidal wave. COVID-19 cases and hospitalizations peaked at record levels in January due to rapid spread of the highly contagious variant. Actual hospital margins were negative for the first time in 11 months as a result. The median Kaufman Hall Operating Margin Index was -3.68% without CARES and -3.3% with CARES.
Outpatient volumes and revenues dropped abruptly as providers delayed nonurgent, outpatient care to mitigate Omicron’s spread and ease demands on hospitals that saw a stark increase in sicker patients requiring longer hospital stays. Meanwhile, hospital expenses continued to climb, spurred by widespread labor shortages and global supply chain challenges. From December to January:
- The median change in Operating Margin (without CARES) dropped 71.3%
- Operating Room Minutes declined 15.7%
- Average Length of Stay was up 8.6%
- Labor Expense per Adjusted Discharge jumped 14.6%
- Total Expense per Adjusted Discharge rose 11.6%