Hospital EBITDA Margins Fell 13 Percentage Points Year-Over-Year in March

The spread of COVID-19 significantly impacted the financial performance of provider organizations last month.

As a result of the ongoing coronavirus disease 2019 (COVID-19) outbreak, hospital EBITDA margins fell 13 percentage points year-over-year in March, according to a Kaufman Hall report released Tuesday.

Provider organizations suffered a sizable financial burden as elective surgeries were largely eliminated to prepare for the influx of patients infected with the novel coronavirus, according to the report.

Operating room minutes fell nearly 20% compared to March 2019, while revenues were 13% lower than budget for inpatient revenue and 17% for outpatient revenue. Additionally, the median occupancy rate for hospitals in March was 53%, down 12% year-over-year, discharges decreased 11%, and emergency department visits fell 15%.

Related: Despite Federal COVID-19 Stimulus, Many Hospitals Could Face Layoffs Within Two Month

Hospitals also dealt with a 13% rise in bad debt and charity care along with a total labor expense increase of 3%.

The report was released less than two weeks after a Guidehouse analysis estimated that 25% of rural hospitals are at high risk of closing due to financial challenges and that the pandemic is "likely to worsen the overall situation."

Related: A Quarter of Rural Hospitals at 'High Risk' of Closure, COVID-19 Likely to Make it Worse

Despite the financial damage suffered by hospitals in March, the Kaufman Hall report anticipates that April will be worse for provider organizations. Additionally, health systems face an uncertain future in terms of reopening elective surgeries, which serve as a sizable revenue generator.

James Blake, managing director at Kaufman Hall, wrote that the "societal, economic, and public health" impact of widespread hospital closures will be "dire."

"Our healthcare workers are risking so much to keep us safe," Blake wrote. "Just as we need them now more than ever, they need us more than ever to provide the financial stability to enable them to continue their critical work in the ongoing fight against COVID-19, and to be fully prepared for other, as-yet unknown future healthcare threats."

Related: Citing COVID-19 Impact, HCA Suspends Dividend and Withdraws Guidance

Correction: An earlier version of this story stated that hospital margins fell 13% year-over-year. EBITDA margins fell 13 percentage points, which is more than 100%.