Research Report

National Hospital Flash Report: July 2020

4 minute
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This month’s National Hospital Flash Report results are very consistent and fully support the Kaufman Hall/AHA report, and further the notion that more relief funds are required for our nation’s hospitals to weather the COVID crisis and ultimately form the front line in our response to such health crises.

Both including and excluding Coronavirus Aid, Relief, and Economic Security (CARES) Act funding, hospital Operating Margins and Operating EBITDA Margins improved in June. Excluding CARES Act funding, these improvements were primarily driven by pent-up demand and a resumption in elective procedures that many hospitals began in June. That being said, on a year-to-date basis, hospitals are still well below their historical margins due to the devastating impact in March, April, and May.

Growing performance variance across regions and bed-sizes indicates uneven recovery, with some hospitals in dire straits and on the brink of closure and others just weathering the storm. Given the unsustainable margins even with CARES relief, additional relief funding will be critical for Congress to consider.

Reduced volumes remain a concern, with hospitals of all sizes and across all regions continuing to experience unfavorable year-over-year and budget variances. For example, Adjusted Discharges declined 7% year-over-year and were 9% below budget in June; Adjusted Patient Days fell 8% compared to June 2019 and 7% compared to budget; and Emergency Department (ED) Visits fell 19% year-over-year and compared to budget. Surgery volumes were the exception, with Operating Room Minutes increasing 40% compared to May 2020 and 5.5% compared to the same period last year as clinicians worked to care for patients whose procedures were postponed at the start of the pandemic.

June revenues were up slightly, with Total Gross Revenue less CARES Act funding up less than 2% year-over-year, Inpatient Revenue up less than 2%, and Outpatient Revenue up 1%. Hospitals continued to drive down total expenses through cost control measures, such as staff furloughs and other efforts. Total Expenses increased 1% year-over-year but were 3% below budget for the month. Total Labor Expense was slightly up from prior year but 4% below budget, and Total Non-Labor Expense was up 1% but 3% below budget. Adjusted for this month’s volumes, most expense indicators demonstrated a decrease from last month, but remained above last year and budget.

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