Hospitals face long recovery from COVID-19 financial hits
Hospitals and health systems are facing an uphill battle for the foreseeable future when it comes to getting their finances back on track from the COVID-19 pandemic, according to new findings from Kaufman Hall.
The pandemic hit hospital systems especially hard in 2020, but results from Kaufman Hall’s January 2021 report reveal the hospital operating margin index was -0.6% for the first month of the year. Declining volumes and outpatient revenues coupled with rising expenses from the pandemic are majorly impacting hospitals and health systems. Fortunately, there are some indications that COVID-19 hospitalizations are on the decline in 2021 after hitting a peak on January 5.
“If the trends continue, they suggest an easing of COVID-19’s impacts following a devastating winter surge,” the report reads.
However, patients were still avoiding or delaying care out of concern for potential exposure to the COVID-19 virus. Discharges dropped 12.7% in January 2021 compared to a year prior, while “adjusted discharges fell 17.6%, adjusted patient days declined 8.3%, and operating room minutes fell 16.6%.” Emergency department visits dropped almost 25% year over year.
Revenue reports were mixed at the start of 2021, with outpatient revenue falling 10.4% year over year, while inpatient revenue rose 1.3%.
At the same time, expenses continued to climb as hospitals and health systems dealt with higher costs of labor, drugs and personal protective equipment needed to treat COVID-19 patients and other high acuity patients. For the month, total expenses were up 4.5% from January 2020, labor expenses rose 6% and total non-labor expense was up 2.3%.
“While national CDC metrics show some signs that the country may be turning the corner on the pandemic, its repercussions for the healthcare industry will persist indefinitely,” the report concluded. “The January performance results reflect the continued burden on U.S. hospitals and health systems, and emphasize the importance of remaining vigilant in combating the virus and moving these vital institutions toward recovery.”
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."