Hospitals continue pandemic rebound

Margins, volumes, and revenues have been on the rise but so have expenses.

The hospital industry continued to rebound from the depths of the COVID-19 pandemic these past few months.

According to the May 2021 National Hospital Flash Report from Kaufman Hall, in April margins, volumes, and revenues rose across metrics both year-to-date (YTD) and year-over-year (YOY), but were down from March 2021. Total expenses also continued to rise YTD and YOY but saw a slight decrease month-over-month.

Margins remained thin with the median Kaufman Hall hospital operating margin index2 coming at 2.4 percent in April, not including federal CARES Act funding; including the funding it was 3.3 percent. The median operating EBITDA (or earning before interest, taxes, depreciation, and amortization) margin was 7.1 percent without CARES funding and 8.1 percent with it, according to the report.

There was especially high YTD and YOY margin for the second month in a row, as the analyses compare April performance with the first full month of the pandemic. April 2021 saw operating margins rose to 101.9 percent or 8.6 percentage points, meanwhile operating EBITDA margin rose 102.2 percent or 8.1 percentage points not including CARES funds. Operating margin rose 90.6 percent YTD or 6.9 percent and operating EBITDA margin rose 77.7 percent or 6.2 percentage points including CARES Act funding, the report says.

These margin gains should be understood in context, not as a sign of the strength in overall hospital performance but as a contrast to the harrowing early days of the COVID-19 pandemic when nationwide shutdowns and restrictions outpatient procedures saw operating margins to nosedive 282 percent YOY and operating EBITDA margins to plummet 174 percent, according to the report.

This April volumes increased at hospitals nationwide across most metrics YTD and YOY with a slight decrease from March.