Rise in COVID-19 Cases Could Impede Performance Recovery of Nation’s Hospitals and Health Systems

According to the National Hospital Flash Report from Kaufman Hall, the nation’s hospitals and health systems experienced varied key performance metrics in June. Although these metrics generally suggest that hospitals and health systems are recovering, progress may be hindered by the rise in COVID-19 cases across the country.

Despite the variance, the report indicated that metrics are better than they were at the start of the pandemic. The improvement can be attributed to the decline in COVID-19 cases in recent months, but as the delta variant and faltering vaccination rates cause cases to climb, future metric trends remain uncertain.

Released by the CDC, COVID-19 metrics declined for most of June before increasing as July drew closer. The seven-day moving average of new COVID-19 cases was 16,019 on June 1, before decreasing by 29% to 11,457 on June 18, and then increasing to 13,285 by June 30. The seven-day moving average of new admissions for patients with COVID-19 was 2,567 on June 1, before decreasing by 29% to 1,822 on June 25, and then increasing to 1,900 by the end of the month.

The seven-day average of daily vaccine doses administered peaked at nearly 1.1 million per day on June 7 and fell 48% to 553,160 per day by June 30.

Not including funding from the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the median Kaufman Hall hospital Operating Margin Index was 2.8% in June, but with the funding, it rose to 4.3%. The median Operating Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) Margin Index for the month, with and without CARES, was 8.8% and 7.4%, respectively.

Not including the CARES Act, operating margin increased 89.5% and Operating EBITDA Margin rose 73.5% during the first half of 2021 compared with the first half of 2020. Operating margin increased 48.7% and Operating EBITDA Margin increased 26.9% year to date (YTD), including CARES.

Operating margin decreased 10.3% and Operating EBITDA Margin decreased 10.7% YTD, not including CARES, compared with the first half of 2019. Operating margin increased 3.7% YTD and Operating EBITDA Margin decreased 0.9%, including federal aid, compared with 2019.

Although national volumes performed better than they did in 2020, they performed worse than pre-pandemic levels across key metrics. Adjusted discharges increased 10.1% YTD compared with January-June 2020 but decreased 4.4% YTD compared with January-June 2019. Emergency Department visits increased 3.2% YTD compared with 2020 but decreased 14.8% YTD compared with 2019. Operating room minutes increased 20.4% YTD compared with 2020 but decreased 2.6% YTD compared with 2019.

Increases in revenue compared with both 2019 and 2020 can be partially attributed to rising outpatient revenues. Gross operating revenue increased 18.2% YTD over 2020 and 7.9% YTD compared with 2019. Inpatient revenue increased 11.9% YTD compared with the first half of 2020 and increased 3.3 percent YTD compared with the first half of 2019. The largest increases were seen among outpatient revenue, as metrics increased by 24.3% YTD from 2020 and 9.6% YTD from 2019.

Large-scale purchases of personal protective equipment and other items required to treat patients with COVID-19 contributed to an increase in hospital expenses. Total expense per adjusted discharge decreased 2.6% from January-June compared with the first half of 2020. Total expense per adjusted discharge increased 14.5% compared with the first half of 2019, however.

Compared with the first half of 2020, labor expense per adjusted discharge decreased 2.9% YTD, but increased 13.7% YTD compared with 2019 levels. Non-labor expense per adjusted discharge decreased 2.2% YTD below 2020 levels but increased 16.5% YTD above 2019 levels.

Inflation experienced the largest one-month change since June 2008, being a 0.9% month-over-month increase. Despite increasing inflation, the Federal Open Market Committee indicated in their June meeting that job market recovery remains the greatest concern. To address this concern, the Federal Reserve is keeping rates low and continuing monthly bond purchases of $120 billion.

Employers added 850,000 jobs in June as the U.S. economy inches toward a full recovery and more than 157.6 million Americans continue to receive their vaccine. The addition is the highest monthly gain since August 2020.