Delta variant hit hospitals hard

Margins in August still low along with many volume metrics

Rising COVID-19 infection rates and hospitalizations from the Delta variant continued to strain U.S. hospitals and health systems in August, according to Kaufman Hall’s latest National Hospital Flash Report.

Hospital margins remained below pre-pandemic levels from 2019, not including federal Coronavirus Aid, Relief, and Economic Security (CARES) Act funding. Most volume metrics also were down versus pre-pandemic levels, but up compared to lows seen in the first eight months of 2020, when COVID-19 mitigation efforts drove significant declines in overall demand.

The average length of stay increased versus 2019 and 2020, as hospitals saw a rise in high-acuity cases—including more severe COVID-19 cases—requiring longer stays. Expenses continued to climb and revenue rose for a sixth consecutive month.

The median Kaufman Hall Operating Margin Index was 3.1% in August without CARES funding, and 3.9% with the aid. The median change in operating margin was down 2.9% year-to-date versus pre-pandemic levels in the first eight months of 2019, not including CARES. With CARES, the median change in Operating Margin rose 11.2% versus January-August 2019.

Revenue and expenses also rose year-to-date versus 2019, due in part to the increase in higher acuity patients. Gross operating revenue was up 9.6% compared to 2019, while total expense per adjusted discharge was up 16.6% over the same time frame.

Key volume metrics in the latest report versus January-August 2019 include:

Adjusted Discharges: Down 4.8%

Emergency Department Visits: Down 11%

Operating Room Minutes: Down 1%

Average Length of Stay: Up 7.9%