Kaufman Hall: Hospital Margins Up Dramatically From One Year Ago, But Still Slender
A press release posted to Kaufman Hall’s website on the morning of May 24 began thus: “U.S. hospitals and health systems continued to see performance improvements in April compared to the devastating losses experienced in the early months of the COVID-19 pandemic. Hospital margins, volumes, and revenues were up across most performance metrics both year-to-date (YTD) and year-over-year (YOY), but were down compared to March, according to the latest issue of Kaufman Hall’s National Hospital Flash Report. While any signs of progress are encouraging, the April results draw a clear contrast to the severity of record-low performance seen the first two months of the pandemic in 2020, rather than strong overall performance so far this year.”
The comparisons to a year ago are dramatic. “Operating Margin, for example, rose 101.9 percent or 8.6 percentage points compared to January-April 2020, not including federal Coronavirus Aid, Relief, and Economic Security (CARES) Act funding. With the funding, Operating Margin was up 90.6 percent YTD or 6.9 percentage points. Operating Margin was up 113.1 percent (39.3 percentage points) without CARES and 109.5 percent (21.4 percentage points) with CARES compared to the first full month of the pandemic in April 2020—when nationwide shutdowns and broad restrictions on outpatient procedures caused Operating Margins to plummet 282 percent (30.3 percentage points) YOY,” the report found.
That said, “April 2021 hospital margins, however, remained relatively thin. The median Kaufman Hall hospital Operating Margin Index was 2.4 percent for the month, not including CARES. Even with the funding, it was 3.3 percent.”
And the press release quoted Erik Swanson, a senior vice president of Data and analytics at Kaufman Hall, as stating that “We have to keep the April results in appropriate context. 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,” Swanson said. “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.”
Significantly, the report found that “Hospitals nationwide saw April volumes increase across most metrics compared to 2020 levels, but decrease slightly compared to March. Adjusted Discharges were up 5.9 percent YTD and jumped 66.4 percent YOY, while Adjusted Patient Days rose 10 percent YTD and 64.8 percent YOY. Both metrics fell 1.0 percent month-over-month.”
