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Report: Hospital Recovery Uneven amid Spread of Delta Variant

Increased expenses led to tight margins during first half of the year

August 09, 2021

Quotation from Kaufman Hall Report on hospital finances during COVID-19

Through June, the nation’s hospitals and health systems have seen mixed progress in their recovery from the pandemic, but the threat of the Delta variant looms during the second half of the year, according to the latest hospital national snapshot report from Kaufman Hall.

The health care analyst’s monthly snapshot offers a look at key national hospital metrics, including patient volumes, COVID-19 cases, adjusted margins, revenue, and expenses. The nation’s hospitals have seen improvement in key areas (inpatient and outpatient revenues) compared to 2020, but still have not recovered to pre-pandemic levels when it comes to expenses and patient volumes, the report notes.

“Overall, hospital metrics have shown steady improvements in recent months as COVID-19 cases declined, but increasing spread of the Delta variant and inconsistent vaccination rates are raising new uncertainties,” the report notes.

Among the key observations from the first six months of the year:

  • Patient volumes:  Adjusted Discharges increased 10.1 percent compared to January–June 2020, but fell 4.4 percent compared to the same period during 2019
  • Emergency Department (ED):  ED visits increased 3.2 percent compared to the same period during 2020, but were down 14.8 percent from 2019
  • Margins have improved, still tight:  The median Kaufman Hall hospital Operating Margin Index was 2.8 percent in June without federal provider relief funding and 4.3 percent with the funding
  • Revenues and expenses:  Total expense per adjusted discharge fell 2.6 percent compared to the first six months of 2020, but was up 14.5 percent when compared to the first six months of 2019. Outpatient revenues saw the largest increases (up 24.3 percent compared to 2020 and 9.6 percent from 2019)

“Rising expenses are contributing to relatively tight hospital margins, even as revenues and volumes continue to show signs of improvement,” Erik Swanson, senior vice president of data and analytics with Kaufman Hall, said in a statement. “And the increasing spread of the Delta COVID-19 variant may stifle further recovery in the coming months.”

HAP applauds Pennsylvania’s hospitals for their outstanding care and dedication to their communities during the pandemic. HAP continues to advocate for state and federal resources that ensure hospitals are able to continue their vital work across the commonwealth during the pandemic and beyond.

The full report is available online.