Hospitals and Physician Groups Show Signs of Recovery as Key Metrics Approach Pre-Pandemic Performance

Recent data show new gains for the nation’s hospitals, health systems, and physician groups as they move closer to pre-pandemic performance, according to two reports from Kaufman Hall released today. The trends suggest a possible end to the volatility wrought by COVID-19 after more than a year of significant disruption.

Hospital volumes, revenues, and margins all rose in May compared to dramatic losses seen in the early months of the pandemic. Even so, volumes and margins both remain below early 2019 levels while expenses continue to climb, as shown in the June issue of the National Hospital Flash Report. Employed physician groups nationwide saw increases in productivity, revenues, and compensation in the first quarter of 2021 compared to the same period in 2020, due in part to rising patient visits. At the same time, the average investment required to supplement physician revenues fell slightly, according to the latest Physician Flash Report.

For hospitals, margins remained narrow, despite rising patient volumes. The median Kaufman Hall hospital Operating Margin Index was 2.6% in May, not including federal Coronavirus Aid, Relief, and Economic Security (CARES) Act funding. With the funding, it was 3.5%. The average Operating Margin rose 95.2% from January to May 2021 compared to the same period in 2020 without CARES, and 56.6% year-to-date (YTD) with CARES. Compared to pre-pandemic levels in the first five months of 2019, however, Operating Margin was down 20.5% YTD without CARES and down 9% YTD with CARES.

Patient volumes increased YTD compared to low levels seen with national shutdowns and restrictions on non-urgent procedures early in the pandemic, but were down compared to 2019 levels in most cases. For example, Adjusted Discharges were up 9.1% YTD from January-May 2020, but fell 7.1% YTD compared to January-May 2019. Adjusted Patient Days rose 14.3% YTD from 2020 to 2021, but were close to pre-pandemic performance—down only 0.4% YTD compared to the first five months of 2019. Emergency Department (ED) Visits were essentially flat compared to January-May 2020, but remained significantly below 2019 rates, while Operating Room Minutes jumped 28.3% YTD in May compared to 2020 and were close to 2019 levels.

Revenues and expenses both increased compared to the first five months of 2019. Gross Operating Revenue (not including CARES) was up 18.6% YTD from 2020, and 5.9% YTD from 2019. Total Expense per Adjusted Discharge was down 1.7% YTD from January-May 2020, but up 16.6% above January-May 2019.

“The data reflect an encouraging trajectory for our nation’s hospitals and health systems, as they continue to recover from the devastation of COVID-19,” said Erik Swanson, a senior vice president of Data and Analytics with Kaufman Hall. “We expect to see gains over the lows seen in early 2020, but comparisons to 2019 provide greater insights to how hospitals are faring relative to pre-pandemic performance.”

For U.S. physician groups, the median Investment/Subsidy per Physician Full-Time Equivalent (FTE) was $239,502 for the first quarter of 2021, down just 1.9% from the first quarter of 2020. Physician compensation also was close to early 2020 performance, with Physician Compensation per FTE at $332,187 in Q1 2021, up just 1.1% from the same period last year. Increasing patient visits contributed to an increase in physician productivity, with Physician Work Relative Value Units (wRVUs) per FTE up 3.6% from Q1 2020 to Q1 2021.

Net Revenue per Physician FTE (including advanced practice providers or APPs) was $575,113 in the first quarter, up 9.4% from Q1 2020, and Total Direct Expense per Physician FTE (including APPs) was up 4.0% over the same period. Clinical and front-office productivity has largely returned to pre-COVID levels as physician productivity has increased, with Support Staff FTEs per 10,000 wRVUs falling just 1.3% from the first five months of 2020 to the same period in 2021.

“The first quarter results show positive signs of stabilization for the physician groups across the country after many months of turmoil from COVID-19,” said Kaufman Hall Managing Director Matthew Bates. “Going forward, they face new uncertainties as expenses continue to rise, the number of employed physicians grows, and the average investment needed to subsidize physician revenues remains at unsustainable levels.”

The National Hospital Flash Report draws on data from more than 900 hospitals, and the Physician Flash Report draws on data from nearly 100,000 providers representing more than 100 specialties. Data from both reports come from Axiom’s Comparative Analytics from Syntellis Performance Solutions.

Kaufman Hall experts are available for comment; please contact Tiffanie Thomas at