January Results Reflect Rocky Start to 2021 for U.S. Hospitals and Health Systems
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 February issue of Kaufman Hall’s National Hospital Flash Report.
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% in January, not including federal Coronavirus Aid, Relief, and Economic Security (CARES) Act funding. With the funding, it was –0.1%. The median Operating Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) Margin was 4.0% without CARES and 4.8% with CARES. Not including the federal aid, Operating Margin fell 46.1% (4.6 percentage points) and Operating EBITDA Margin was down 34.1% (4.2 percentage points) compared to January 2020.
“January marked a potential turning point in the pandemic, as we saw federal coronavirus statistics start to wane later in the month,” said Jim Blake, a managing director at Kaufman Hall and publisher of the National Hospital Flash Report. “While declining COVID-19 cases and hospitalizations are a very welcome sign, the pandemic continues to create a challenging situation for hospitals and health systems. We must remain vigilant in our fight against the virus, and in providing these vital institutions the support they need to move toward recovery.”
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%, Adjusted Patient Days declined 8.3%, and Operating Room Minutes fell 16.6%.
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%. Inpatient volumes fell 2.3% 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% compared to January 2020. The lower outpatient revenues pushed Gross Operating Revenue (not including CARES) down 4.8% year-over-year, while total Inpatient Revenue increased just 1.3% 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%, Labor Expense per Adjusted Discharge jumped 30.1%, and Non-Labor Expense per Adjusted Discharge increased 24.4% compared to the same period last year.
The National Hospital Flash Report draws on data from more than 900 hospitals.
Kaufman Hall experts are available for comment, please contact Tiffanie Thomas at tthomas@MessagePartnersPR.com.