'Not out of the woods yet': Delta continues to strain hospital finances

Alia Paavola - Print  | 

Hospital margins and many volume metrics remain lower than levels before the pandemic, underlining how the spread of the delta variant continued to strain hospitals and health systems in August, according to a Sept. 27 Kaufman Hall report. 

The median hospital operating margin was 3.1 percent in August without federal relief aid and 3.9 percent with the aid. Healthcare management consultants Kaufman Hall reported the 3.9 percent margin was a decrease of 11.8 percent from August 2019, before the pandemic.

For the first eight months of 2021 and without relief aid, the median change in operating margin was down 2.9 percent compared to the first eight months of 2019. With relief aid, the median change was an 11.2 percent increase compared to the eight months from January to August 2019.

Hospital volume also was down across several key metrics compared to levels before the pandemic, but remained above 2020 levels. For example, adjusted discharges were down 4.8 percent in the first eight months of 2021 compared to the same period in 2019, but up 8.7 percent compared to 2020. Emergency department visits dropped 11 percent in January to August of this year compared to the same period in 2019, but rose 7.3 percent compared to the first eight months of 2020.

Revenues and expenses also rose in the first eight months of this year compared to 2019. This is due in part to an increase in higher acuity patients, Kaufman Hall said. In particular, gross operating revenue rose 9.6 percent compared to 2019. But total expense per adjusted discharge rose 16.6 percent over the same time frame. 

"Hospitals nationwide have faced significant recent setbacks in the wake of the delta variant," said Erik Swanson, senior vice president of data and analytics at Kaufman Hall. "COVID-19 rates appear to be tapering in September, but the August data show we are not out of the woods yet, and hospitals face additional uncertainties as we move into the fall and winter."

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