Hospitals see negative margins to start 2021: Kaufman Hall

Hospital margins, patient volume and outpatient revenue continue to lag when compared to prior year performance, according to a new report from healthcare consulting firm Kaufman Hall. 

In January, the median hospital operating margin was minus 0.6 percent, not including aid from the Coronavirus Aid, Relief and Economic Security Act. Even with the funding, hospital margins sank to minus 0.1 percent in the month.

In addition to seeing median operating margin declines in January, hospitals' median margin on operating earnings before interest, taxes, depreciation and amortization was 4 percent without funding from the CARES Act and 4.8 percent with CARES Act funding. 

Overall in January, the median operating operating margin fell 46.1 percent for hospitals without the federal funding and operating EBITDA margin was down 34.1 percent when compared to January 2020. 

Outpatient revenue fell 10.4 percent in January compared to January 2020, which also pushed gross operating revenue down 4.8 percent, not including CARES Act funding, according to the report. But inpatient revenue grew year over year by 1.3 percent.

Hospital volume also fell year over year for most metrics, Kaufman Hall said. Specifically, adjusted discharges fell 17.6 percent, adjusted patient days declined 8.3 percent and operating room minutes fell 16.6 percent in January compared to January 2020. 

Emergency department visits declined 24.7 percent, and inpatient volume fell 2.3 percent, but hospitals saw average length of stay increase due to higher acuity patients. 

"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. "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."

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