High hospitalization rates, consumer fears hit hospitals and physician groups hard

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High hospitalization rates, consumer fears hit hospitals and physician groups hard

Press releases may be edited for formatting or style | January 25, 2021
CHICAGO, Ill. – High COVID-19 hospitalization rates and consumer reluctance to visit healthcare facilities for non-urgent care continue to drive poor performance for the nation’s hospitals, health systems, and physician groups, new Kaufman Hall reports find.

The median hospital Operating Margin Index closed a tumultuous 2020 at 0.3 percent, not including federal Coronavirus Aid, Relief, and Economic Security (CARES) Act funding, according to the January National Hospital Flash Report. With the funding, it was 2.7 percent. The median 2020 Operating Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) Margin was 5.1 percent without CARES and 7.6 percent with CARES.

Physician practices saw some gains from July to October 2020, but remained below 2019 levels on most performance measures, according to the latest data from the new quarterly Physician Flash Report. The median investment needed to subsidize inadequate physician revenues fell 9.5 percent for the quarter, but was up 0.5 percent year-over-year in October at $194,632 per physician.

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For hospitals, escalating expenses coupled with declining volumes and outpatient revenues continued to stress limited resources. The median Operating Margin dropped 55.6 percent (4.9 percentage points) throughout 2020 without CARES, and was down 16.6 percent (1.2 percentage points) with CARES. In December, Operating Margin declined 18 percent (2.4 percentage points) year-over-year but increased 21.2 percent (2.2 percentage points) from November without CARES.

Rising COVID-related hospitalizations pushed inpatient volumes up for a second consecutive month in December. Patient Days rose 4.5 percent compared to December 2019. Discharges, however, were down 4.3 percent year-over-year and down 7.3 percent year-to-date, indicating an increase in higher acuity patients requiring longer care. The Average Length of Stay rose 11 percent year-over-year and 6.6 percent from January through December 2020.

Emergency Department Visits again saw the biggest volume declines, falling 16.2 percent for January through December and 22.6 percent year-over-year. Operating Room Minutes fell 10.5 percent over the calendar year as many patients delayed non-urgent procedures due to COVID-19 concerns.

Lower volumes contributed to revenue declines, particularly for outpatient services. Gross Operating Revenue (not including CARES aid) dropped 3.1 percent in 2020, while Outpatient Revenue fell nearly 6 percent. Inpatient Revenue was essentially flat, rising just 0.3 percent for the year.

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