Hospitals saw negative operating margins in February for second consecutive month

 

• Hospitals' operating margins were negative in February for the second consecutive month even as cases of the omicron variant waned, according to Kaufman Hall’s National Hospital Flash report. Negative margins in January were the first seen in 11 months.
• The median Kaufman Hall Operating Margin Index was -3.45%, up from -4.25% in January but still well below levels hospitals can sustain, the report said.
• Volumes for inpatient services fell while outpatient volumes staggered with revenues in those categories falling 19.3% and 5%, respectively, from January, according to the report.

Cases of the omicron variant peaked in January though swiftly plummeted in February as hospitals in turn saw fewer severely ill COVID-19 patients who stayed for shorter visits.

From January to February, patient days dropped 13.3% and average length of stay dropped 5.3% according to Kaufman Hall’s report, which draws on data from more than 900 hospitals across the country.

Major declines in COVID-19 care weren’t complemented by significant rises in outpatient care, as revenue in that category fell 5% month over month. Surgery volumes rose somewhat though, with operating room minutes up 6.5% month over month.

Ongoing, national labor shortages coupled with global supply chain issues drove up hospitals’ expenses up in recent months, though significantly lower volumes in February granted some relief.

Total expense per adjusted discharge fell 4.5% from January to February, while labor expense per adjusted discharge fell 6.1%. Non-labor expense per adjusted discharge fell 3.6%.

Despite those improvements, expenses are still high compared to this time last year.

Compared to February 2021, total expense per adjusted discharge was up 10.4%, labor expense per adjusted discharge was up 15.3%, and non-labor expense per adjusted discharge was up 8%.

"Margins, revenues, and inpatient volumes declined for most organizations in February, while outpatient care signaled only slow returns," Erik Swanson, senior vice president of Data and Analytics with Kaufman Hall, said.

"The metrics indicate a challenging recovery from the Omicron surge in the coming months," he said.

The median change in operating margin for hospitals fell 11.8% from January to February, according to the report. In February 2020, just before the pandemic started, the median change in operating margin was down 42.4%.

https://www.healthcaredive.com/news/hospital-margins-negative-february-kaufman-hall-COVID/621120/