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Kaufman Hall: Post-Pandemic Rebound Continues for Hospital Finances

Analysis  |  By Jack O'Brien  
   May 24, 2021

Despite the bullish performance metrics in April, emergency department visit results were "mixed," according to Kaufman Hall.

Hospital margins, volumes, and revenues in April increased year-over-year as the financial recovery from the COVID-19 pandemic continues for provider organizations, according to a new Kaufman Hall report released Monday morning.

Hospital operating margin rose 8.6 percentage points compared to January-April 2020, not including CARES Act funding. However, hospital margins remained thin at 2.4% during the month, not including CARES Act funding.

Related: Hospital Margins Up, Volumes Down, Finds New Report

Despite the bullish performance metrics in April, emergency department visit results were "mixed," according to Kaufman Hall, with visits down 7% year-to-date but up more than 57% year-over-year.

Additionally, the report emphasized that while hospitals are outperforming financial metrics from one year ago, these results "draw a clear contrast" to the depths of the pandemic rather than a "strong overall performance so far this year."

"We have to keep the April results in appropriate context," Erik Swanson, a senior vice president of data and analytics at Kaufman Hall, said in a statement. "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. 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."

Related: RWJBarnabas Health CFO: Pandemic Financial Update and M&A Expectations

While hospital volumes increased significantly compared to 2020 levels, there was a slight decline compared to March 2021. The report found that both adjusted discharges and adjusted patient days rose year-to-date and year-over-year but fell month-over-month.

Excluding CARES Act funding, hospital gross operating revenue experienced double-digit increases both year-to-date (16.7%) and year-over-year (71.8%) but fell 2.5% compared to March 2021. 

Hospital expenses continued to be above 2020 levels but saw month-over-month decreases, including across total labor expense and non-labor expense.

Related: CommonSpirit Records Operating Income of $539M

Jack O'Brien is the Content Team Lead and Finance Editor at HealthLeaders, an HCPro brand.

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