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Pandemic Continues to Strain Hospital Volumes, Margins, Revenues in 2021

Analysis  |  By John Commins  
   February 22, 2021

Year-over-year volumes fell across most metrics as many healthcare consumers continued to avoid or delay care.

Even as COVID-19 cases and deaths declined in January, the pandemic continued to dampen volumes, margins, and outpatient revenues of hospitals during the first month of 2021, Kaufman Hall reports.

The median hospital operating margin for January was –0.6%, not including federal Coronavirus Aid, Relief, and Economic Security (CARES) Act funding. With CARES funding, it was –0.1%, according to KH's National Hospital Flash Report for February, which examines data from more than 900 hospitals.

Median operating Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) margin was 4% without CARES and 4.8% with CARES. Not including CARES, operating margin fell 46.1% (4.6 percentage points) and operating EBITDA margin fell 34.1% (4.2 percentage points) compared to January 2020, KH said.

"January marked a potential turning point in the pandemic, as we saw federal coronavirus statistics start to wane later in the month," Jim Blake, a managing director at Kaufman Hall and publisher of the National Hospital Flash Report, said in a media release.

"While declining COVID-19 cases and hospitalizations are a very welcome sign, the pandemic continues to create a challenging situation for hospitals and health systems. We must remain vigilant in our fight against the virus, and in providing these vital institutions the support they need to move toward recovery," Blake said.

KH also found that:

  • Year-over-year volumes fell across most metrics as many healthcare consumers continued to avoid or delay care. Year-over-year, adjusted discharges fell 17.6%, adjusted patient days fell 8.3%, and operating room minutes fell 16.6%.
     
  • Emergency department visits had the biggest drop compared to other volume metrics at 24.7%. ED volumes have seen double-digit year-over-year declines each month since the pandemic began in March 2020.
     
  • Inpatient volumes fell 2.3% year-over-year following two months of increases from rising COVID-19 hospitalizations, although hospitals continue to see higher average length of stay due to higher acuity patients.
     
  • Outpatient revenue fell 10.4% compared to January 2020, the ninth decline for the metric in the past 10 months. Lower outpatient revenues pushed gross operating revenue without CARES down 4.8% year-over-year, while total inpatient revenue increased 1.3% year-over-year.
     
  • Total expenses continued to rise as hospitals bore the high costs of labor, drugs, personal protective gear, and other equipment needed to treat sicker patients, including COVID-19 cases. Year-over-year, total expense per adjusted discharge rose 25.4%, labor expense per adjusted discharge rose 30.1%, and non-labor expense per adjusted discharge rose 24.4%.

“While declining COVID-19 cases and hospitalizations are a very welcome sign, the pandemic continues to create a challenging situation for hospitals and health systems.”

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


KEY TAKEAWAYS

Year-over-year, adjusted discharges fell 17.6%, adjusted patient days fell 8.3%, and operating room minutes fell 16.6%.

ED visits had the biggest drop compared to other volume metrics at 24.7%.

ED volumes have seen double-digit year-over-year declines each month since the pandemic began in March 2020.

Inpatient volumes fell 2.3% year-over-year following two months of increases from rising COVID-19 hospitalizations.

Outpatient revenue fell 10.4% compared to January 2020, the ninth decline for the metric in the past 10 months.

Lower outpatient revenues pushed gross operating revenue without CARES down 4.8% year-over-year, while total inpatient revenue increased 1.3% year-over-year.


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