Hospital operating margins plummet; more financial damage ahead

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The COVID-19 pandemic is putting many U.S. hospitals in a fragile financial position, according to a report from Kaufman Hall. 

Kaufman Hall's data on more than 800 hospitals revealed that significant declines in revenue and patient volume due to the pandemic caused operating margins to sink within a matter of weeks. 

"The data paints a dire picture for U.S. hospitals," Jim Blake, managing director of Kaufman Hall said. "These initial numbers only reflect the first two weeks of the COVID-19 response and likely indicate more negative results in the future."

Overall hospital revenues fell below budget expectations in March largely due to lower patient volume. Operating room minutes were down 20 percent year over year and emergency department visits dropped 15 percent. 

Hospitals also incurred higher expenses in March, despite seeing fewer patients. 

Those factors resulted in hospital operating margins dropping 150 percent year over year in March and operating EBITDA margins dipping more than 100 percent. 

More articles on healthcare finance:
Tower Health furloughs 1,000 workers amid dramatic revenue drop
HHS unveils plan to deliver $40B in COVID-19 aid to hospitals
Banner Health cuts exec pay, plans to furlough up to 7% of employees

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