Hospitals see finances improve in April, but metrics signal challenges ahead, Kaufman Hall says

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U.S. hospitals and health systems saw an April with higher margins, volumes and revenue compared to April 2020's COVID-19-driven, record-low performance, according to a new report from healthcare consulting firm Kaufman Hall. However, these same metrics were down compared to March of this year, suggesting continued uncertainty. 

Compared to April 2020, hospitals saw their average operating margin rise 39.3 percentage points without factoring in federal aid from this April and 21.4 percentage points when factoring in the aid. Despite the sharp increase, hospital margins remained thin in April 2021, with the median hospital margin at 2.4 percent — not including the aid — and 3.3 percent with the federal funding. 

Gross operating revenue increased 71.8 percent in April 2021 year over year, while inpatient revenue rose 37.1 percent and outpatient revenue jumped 114.8 percent — but all of these metrics declined in April 2021 when compared to March 2021, Kaufman Hall said.

April 2021 hospital volumes increased across most metrics compared to April 2020. In particular, adjusted discharges jumped 66 percent year over year while adjusted patient days rose 64.8 percent year over year. Kaufman Hall noted that both of these metrics declined 1 percent month over month.

"We have to keep the April results in appropriate context," said Erik Swanson, senior vice president of data and analytics at Kaufman Hall. "March and April 2020 were absolutely unprecedented months for our nation’s hospitals and health systems, as they focused their attention on treating patients impacted by the first wave of the pandemic. While we anticipate the data in the months ahead will show additional gains over low levels seen in early 2020, overall margins remain low and fluctuations month-over-month convey continued uncertainties for hospitals, as they work to recover from a profoundly challenging pandemic."

 

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