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Analysis

Hospital Margins Plummeted 174% in April

By John Commins  
   May 26, 2020

Steep volume and revenue drops drove record-poor margin performances.

With the COVID-19 pandemic shuttering elective procedures, the nation's hospitals saw operating margins freefall 174%, when compared with April 2019, according to a report from Kaufman Hall.

Operating EBITDA margins for April were down 118% from March, coinciding with the initial impact of the pandemic, as hospitals bore the brunt of a full month of COVID-19.

Related: Coronavirus Craters Mayo Clinic Q1 Revenues  

Operating margins fell 282% year-over-year and 120% compared to March. Median hospital operating margins fell to –29%, as measured by the Kaufman Hall's Hospital Operating Margin index.

Operating room minutes fell 61% in April, compared to April 2019—which Kaufman Hall said is more than triple the declines seen in March. In addition, discharges fell 30% year-over-year, and ER visits fell 43%. Outpatient Revenues fell 50% year-over-year and 51% below budget, while inpatient revenues fell 25% year-over-year and fell 30% below budget.

The losses mounted even as hospitals to drastic measures to cut costs, including widespread layoffs and furloughs of non-essential workers, and pay cuts for executives.

Related: AHA Says COVID-19-related Losses for Hospitals Will Surpass $200B  

Kaufman Hall predicts that the aftershocks of the pandemic will lead to major changes in the healthcare industry, including reevaluations of cost structure, care models, and competitive dynamics.

"While healthcare leaders work to quantify the pandemic's near-term financial implications and develop sophisticated financial recovery plans, they must also develop a viewpoint about the post-COVID environment and plans for the roles their organizations should play," the report said.   

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.


KEY TAKEAWAYS

Operating EBITDA margins for April were down 118% from March, coinciding with the initial impact of the pandemic, as hospitals bore the brunt of a full month of COVID-19.

Operating margins fell 282% year-over-year and 120% compared to March. Median hospital operating margins fell to –29%.

Operating room minutes fell 61% in April, compared to April 2019—more than triple the declines seen in March.

Discharges fell 30% year-over-year, and ER visits fell 43%.


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