A new report from the Chicago-based firm finds that hospitals continue to face narrow margins due to current events surrounding the pandemic. A press release posted to Kaufman Hall’s website on August 2, 2021, stated: “U.S. hospitals and health systems continued to experience tight margins in June, as rising expenses offset revenue and volume improvements—amid concern about the impact of the COVID-19 Delta variant—according to the latest issue of Kaufman Hall’s National Hospital Flash Report.”
Although key performance metrics have improved from the start of the pandemic, expenses rose above 2019 levels. “Revenues surpassed both 2019 and 2020 performance. Overall, hospital metrics have shown steady improvements in recent months as COVID-19 cases declined, but increasing spread of the Delta variant and inconsistent vaccination rates are raising new uncertainties,” the release stated.
The authors of the report found that while some measures of financial performance have improved, hospitals’ overall performance remains suboptimal. The report found that: “Actual margins remained tight. The median Kaufman Hall hospital Operating Margin Index was 2.8 percent in June, not including federal Coronavirus Aid, Relief, and Economic Security (CARES) Act funding. With the funding, it was 4.3 percent. Compared to early devastation from COVID-19 during the first six months of 2020, Operating Margin jumped 89.5 percent year-to-date (YTD), not including CARES. With CARES, Operating Margin was up 48.7 percent YTD. Compared to the first half of 2019, however, Operating Margin was down 10.3 percent YTD without CARES but rose 3.7 percent YTD with CARES.”
Erik Swanson, senior vice president of data and analytics with Kaufman Hall, was quoted in the release saying that “Rising expenses are contributing to relatively tight hospital margins, even as revenues and volumes continue to show signs of improvement. And the increasing spread of the Delta COVID-19 variant may stifle further recovery in the coming months.”
Volumes rose above 2020 levels but continued to stay down compared to the pre-pandemic levels across key metrics. “Adjusted Discharges, for example, rose 10.1 percent YTD compared to January-June 2020, but fell 4.4 percent YTD compared to the same period in 2019.”
Importantly, “Revenues were up compared to both 2019 and 2020, due in part to rising outpatient revenues. Outpatient Revenue saw the biggest increases, jumping 24.3 percent YTD from 2020 and 9.6 percent YTD from 2019.”
