A just-released report by the Chicago-based Kaufman Hall consulting firm confirms what had already been anecdotally known—that U.S. hospitals suffered financially last month, as COVID-19 began impacting them
The April 2020 “National Hospital Flash Report,” published on April 21 by the Chicago-based Kaufman Hall consulting firm, paints an ominous portrait of a U.S. hospital industry hit extremely hard by the COVID-19 pandemic, based on March financial data, early on in the pandemic’s spread across the U.S.
As the report noted, “Hospitals across the country took a financial beating in March, as the first effects of the COVID-19 pandemic hit the industry, particularly in the second half of the month. Volume and revenue declines, along with flat expenses, resulted in a dramatic fall in margin within a matter of weeks, plunging not-for-profit hospitals, which historically operate on thin margins, deep into the red."
Indeed, “Hospitals’ median Operating EBITDA Margins fell more than 100 percent in March, dropping a full 13 percentage points relative to last year. This represents a dramatically greater change than seen most months,” the report noted. “For example, the median Operating EBITDA Margin change was up just 1 percent point in March 2019, and down 1 percentage point in February 2020. These margins likely fell even further across broad health systems, which often include substantial physician and ambulatory operations outside of the hospital.”
Importantly, the report noted, “Across-the-board volume declines were a major contributor to the steep decline in margins, as providers postponed elective procedures to free capacity and equipment for COVID-19 patients, and as individuals canceled appointments for fear of contracting or unwittingly spreading the virus. Operating Room minutes were down nearly 20 percent compared to the same period last year, and were more than 25 percent below budget.” Not surprisingly, then, “These cancellations drove significant declines in revenues, as hospitals rely on income from scheduled procedures—such as joint replacements and non-emergent heart surgeries—to balance losses from many other acute-care services. March revenues fell 13 percent compared to the same period last year, and were significantly below budget expectations.”
