Physician groups, hospitals approaching pre-pandemic levels

This may be a sign that COVID-19 volatility in the healthcare industry has ended.

The healthcare market is continuing its rebound from the volatility of the COVID-19 pandemic as hospitals and physician groups return to pre-pandemic levels.

According to a news release from Kaufman Hall, hospital volumes, revenues, and margins all rose in May when compared to the precipitous falls seen early in the pandemic, but volumes and margins are still below early-2019 levels as expenses continue to rise.

Meanwhile, employed physician groups across the country have seen increased productivity, revenue, and compensation in the first quarter of this year compared to the same period in 2020 partially because of the rise in patient visits. During the same period, the average investment to supplement physician revenue fell slightly, the release says.

Hospital margins remained narrow with the median Kaufman Hill Operating Margin Index being 2.6 percent in May not including CARES Act funding, and 3.5 percent with the funding. This saw the average operating margin rising 95.2 percent from January to May of this year compared to the same period in 2020 without the CARES Funding, and 56.6 percent with CARES. Compared to pre-pandemic levels operating margins were down 20.5 percent without CARES funding, and down 9 percent with the funding, the release says.

“The data reflect an encouraging trajectory for our nation’s hospitals and health systems, as they continue to recover from the devastation of COVID-19,” Erik Swanson, a senior vice president of Data and Analytics with Kaufman Hall, says in the release. “We expect to see gains over the lows seen in early 2020, but comparisons to 2019 provide greater insights to how hospitals are faring relative to pre-pandemic performance.”

Patient volumes also grew year-to-date (YTD) compared to the dismal levels of the early months of the pandemic caused by shutdowns and restrictions but are still mostly down compared to 2019. Adjusted discharges were up 9.1 percent YTD from 2020 but fell 7.1 percent YTD compared to 2019, while adjusted patient days rose 14.3 percent YTD from 2020 to 2021, down only 0.4 percent YTD compared to the first five months of 2019, the release says.

“The first quarter results show positive signs of stabilization for the physician groups across the country after many months of turmoil from COVID-19,” Kaufman Hall Managing Director Matthew Bates says in the release. “Going forward, they face new uncertainties as expenses continue to rise, the number of employed physicians grows, and the average investment needed to subsidize physician revenues remains at unsustainable levels.”

More information can be found in the National Hospital Flash Report and the Physician Flash Report.