Although hospital operating margins have improved significantly since the first six months of 2020, they remain tight as the spread of the delta variant of the coronavirus increases uncertainties, according to to a new report from Kaufman Hall health consultancy.
The Median Operating Margin Index, which is made up of the national median from the Kaufman Hall dataset adjusted for hospital allocations, was 2.8% in June, excluding funds from the Aid, Relief and Relief Act. Economic Security for Coronavirus. With financing, it was 4.3%.
This represents an 89.5% increase over the first six months of last year, excluding CARES Act funds, and a 48.7% increase when funds are included, according to the report, which used data of more than 900 hospitals collected monthly during the last three. years.
Volumes have also seen gains as of 2020, but remain low compared to pre-pandemic levels. For example, adjusted downloads increased 10.1% from January to June this year compared to the same period last year, but fell 4.4% compared to the first six months of 2019. Similarly, downloads Emergency department visits are up 3.2% year-to-date compared to 2020, but are down 14.8% compared to 2019.
Despite these uneven volumes, hospital admissions increased this year so far in 2019 and 2020. This was due in part to increased outpatient admissions, according to the report. Gross operating income from January to June, excluding CARES Act funds, increased 18.2% compared to the first six months of last year and 7.9% compared to 2019. Outpatient revenues increased 24.3% so far in 2020 and 9.6% since 2019.
But expenses continue to rise, offsetting increases in revenue and volumes, the report shows. Total expenses increased 8.5% during the first six months of this year compared to the same period last year, and increased 9.4% compared to January to June 2019.
“Increased expenses are contributing to relatively tight hospital margins, even as revenues and volumes continue to show signs of improvement,” said Erik Swanson, senior vice president of data and analytics at Kaufman Hall, in a press release. “And the increasing spread of the Delta Covid-19 variant may stifle a further recovery in the coming months.”
The Delta variant represents a large majority (93%) of the new cases reported during the last two weeks of July, according to data from the Centers for Disease Control and Prevention.
As the pandemic has shown, cases can accelerate rapidly, meaning that hospital margin gains are fragile.
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