Hospitals struggling with higher expenses, margin declines: report

The Kaufman Hall report found declines in patient days and emergency department visits, suggesting some patients are delaying care due to the COVID-19 pandemic.

With COVID-19 cases rising, hospitals continue to battle higher expenses and operating margins remain well below what they were before the pandemic, according to a new Kaufman Hall report.

Kaufman Hall’s latest National Hospital Flash Report, which was released Tuesday, outlined more struggles for health systems in November.

Excluding federal CARES funding related to the pandemic, the median change in operating margin for hospitals fell 22% below the level in November 2019. On a positive note, operating margins did see a month-to-month increase (8%) compared to October 2021.

Labor costs continued to rise for hospitals in November. Labor expenses per adjusted discharge rose 2.7% compared to October 2021. The rise in labor expenses is more stark when compared to November 2019; labor expenses per adjusted discharge have risen nearly 25% compared to two years ago.

Hospitals experienced a decline in volume in November, with patient days, emergency department visits and discharges all falling compared to October. Patient days fell by 3.3%, discharges dropped by 4.8% and emergency department visits declined by 2.6%.

The report suggested with another surge of COVID-19 cases, some people are delaying treatment for health conditions. In addition, some health systems have been postponing non-urgent surgeries due to the spike in patients with the coronavirus who need hospital treatment.

The report also suggested the trend of patients delaying care for non-COVID issues could continue in the coming months due to the rise of the Omicron variant. Some states are now reporting COVID-19 hospitalizations at the highest level of the pandemic and the spikes in new infections have reached unprecedented levels.

Even with the reduced volume, the average length-of-stay in hospitals actually rose slightly (0.8%) in November, compared to October. Hospitals may have seen fewer patients in November but they treated patients with more serious medical issues, contributing to the uptick in the duration of their stays, the report suggested.

Hospitals continue to see increases in the costs of supplies and drugs, the report said. Supply costs are 10% higher than they were in November 2020, while drug costs are 9% higher than they were a year ago.