Home Health Care Report: Despite some progress, hospital finances remain on shaky ground

Report: Despite some progress, hospital finances remain on shaky ground

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Though signs of progress are emerging as the U.S. moves the needle on Covid-19 vaccinations, hospitals still face many of the same financial challenges as they did in 2020: narrow margins, low patient volumes and high costs, according to a report from healthcare consultancy Kaufman Hall.

For hospitals, operating margins increased overall from January through March compared with the same period last year, but they are still narrow, according to the report, which used data from over 900 hospitals gathered monthly over the last three years.

Without funding from the Coronavirus Aid, Relief, and Economic Security Act, hospital operating margins increased 34.5% or 2.5 percentage points through March of this year. But the median hospital operating margin index — the national median figure in Kaufman Hall’s dataset adjusted for allocations to hospitals — was just 1.4% in March.

With CARES Act funding, operating margins increased 45.7% (3.2 percentage points) year-to-date, and the median hospital operating margin index was 2%.

But compared to the first month of the pandemic, hospitals have experienced significant gains. Operating margins jumped 128.4% year-over-year from March 2020 without federal funding, and 130.3% with it.

“We expect to see additional margin gains in the months ahead, especially in comparison to record-poor performance in the early months of the pandemic,” said Jim Blake, a managing director at Kaufman Hall, in a news release.

Hospital volumes, on the other hand, decreased across most metrics from January through March, according to the report. Discharges were down 8.2% compared to the same period in 2020, and emergency department visits fell 19.2%.

But the average length of stay increased 8.3% year-to-date versus January to March 2020, and operating room minutes jumped by 3.1%.

Gross operating revenue, not including funding from the CARES Act, also rose — jumping 4.4% from January to March compared with the same period the year prior.

At the same time, hospital expenses increased across most metrics and measures. Total expense, total labor expense and total non-labor expense all increased by about 4% through March this year, compared with the early months of 2020.

Overall, hospitals still have a long way to go to recover financially in relation to the pre-pandemic period. In fact, hospitals are expected to continue to see financial losses in the coming year, despite the modest gains they have experienced so far, the report states.

“Over the course of 2021…we project hospital margins could be down as much as 80% and revenues down as much as $122 billion compared to pre-pandemic levels as hospitals continue to feel the dire repercussions of Covid-19,” Blake said.

Photo Credit: Baris Ozer, Getty Images

 

 

 

 

 

 

 

 

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