Hospitals still suffering financially
Hospitals faced more financial challenges in April, following incremental improvement in finances in March.
Compared to March, hospital revenues and volumes plummeted in April, while expenses only slightly lessened, according to the latest National Hospital Flash Report from Kaufman Hall.
The report underscores the ongoing challenges for hospitals and health systems as they continue to grapple with the impact of the COVID-19 pandemic. Hospital operating margins saw a big drop in April––down 38.1% from last month and 76% from April 2021. Year to date, Kaufman Hall’s Operating Margin Index showed actual margins were -3.09% through April. With so many months of losses, hospitals are really feeling the impact of extended negative margins, the report highlighted.
“The first four months of the year have been highly challenging for hospitals and health systems, and do not bode well for the remainder of the year,” the report stated. “Even if margins cumulatively return to pre-pandemic levels, many will still end up with substantially depressed margins at year’s end.”
Expenses were slightly better for hospitals in April, though costs are still high as a result of labor challenges. Expenses dropped 4.3% from March. Compared to pre-pandemic times, hospital expenses are well above the norm––total expenses grew by 8.3% year-over-year and 9.6% year-to-date. The report comes after Kaufman Hall found hospitals’ labor costs have risen by one-third since the start of the pandemic. Labor shortages and huge demand have forced hospitals and health systems to offer higher wages and more incentives, helping push labor as a percentage of total expenses from 46% to 49%, Kaufman Hall reported in May.
Patient volumes also lagged in April, putting more pressure on margins. Length of stays also dropped during the month––average length of stay was down 2.2% from March, but up 3.5% compared to April 2021. Patient days were down 5.7% month-over-month and 1.8% from a year ago. Adjusted patient days dropped 6.5% from March to April, but were up 1.8% compared to April 2021, Kaufman Hall found.
Worse, more patients are coming into hospitals sicker, and the higher acuity levels are further upping expenses. Patients with chronic conditions were likely delaying care throughout the pandemic, potentially worsening their conditions and requiring more infusions, expensive specialty pharmaceuticals and pricey supplies.
The change in patient volumes also had an impact on revenues. Gross operating revenue was down 7% from March and outpatient revenue dropped 7% from March. However, gross operating revenue is up 6.6% year to date, and outpatient Revenue is up 8.5% over the same time period. Inpatient revenue dropped 7.1% from the previous month and is up 5.3% this year.
Amy joined TriMed Media as a Senior Writer for HealthExec after covering home care for three years. When not writing about all things healthcare, she fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."