Omicron COVID variant slammed hospitals in January

The surge in the omicron COVID-19 variant slammed the financial health of hospitals and health systems during the first month of 2022.

COVID-19 cases and hospitalizations soared during the first month of the year, with the seven-day moving average of new COVID-19 cases jumping 93%, from 417,524 on Jan. 1 to an all-time high of 807,115 on Jan. 15, according to the latest National Hospital Flash Report Kaufman Hall. Over the same two week-period, the 7-day moving average of

New daily admissions climbing 54%, from 14,017 on Jan. 1 to a peak of 21,622 on Jan. 15. The National Hospital Flash Report draws on data from more than 900 hospitals from Syntellis Performance Solutions. 

The report determined the jump in cases and hospitalizations dramatically influenced hospital margins negatively. The surge caused some institutions to temporarily halt non-urgent procedures –– a measure previously taken during the first few weeks of the pandemic in 2020. 

“Our nation’s hospitals and health systems had a very difficult month to start the year,” Erik Swanson, a senior vice president of data and analytics with Kaufman Hall, said in a statement. “While COVID-19 cases have swiftly declined since peaking in mid-January, the effects of the sudden and sizable margin and outpatient volume declines will be felt throughout 2022.”

Additionally, the numbers of inpatients requiring longer hospital stays rose, and expenses continued to climb due to widespread staffing and supply chain issues, Kaufman Hall reported. 

“The median Kaufman Hall Operating Margin Index for the month was -3.68%, without CARES,” the report noted. “With the federal funding, it was -3.3%.”

Hospital expenses rise due to staff shortages and rising costs

In addition to lower margins, hospitals and health systems were dealing with a tighter labor market during January and overall higher expenses. Staffing shortages forced hospitals and health systems to increase wages, and despite a decrease in staffing levels, year-over-years labor expenses rose. Beyond labor expenses, supply chain disruptions also drove up expenses.

Total expense per adjusted discharge was up 10.9% during January compared to the same month in 2021. Labor expense per adjusted discharge increased 14.2%, and non-Labor expense per adjusted discharge was up 5.9%. The rise in expenses during January were “most dramatic compared to pre-pandemic levels,” Kaufman Hall noted.

 

Related Kaufman Hall hospital market content:

Kaufman Hall acquires Healthcare Real Estate Capital

M&A activity was down in 2021, but 'mega-mergers' spiked

Bigger healthcare mergers are on the horizon

Delta variant squeezes hospital margins

Hospitals, physician groups recovering from pandemic lows

Hospitals face long recovery from COVID-19 financial hits

COVID may cause hospitals’ bottom lines to bottom out — again

Amy Baxter

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."

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