In the month of October, the operating margins for U.S. hospitals fell, revenues flattened, and expenses rose due to the pandemic, according to the November issue of Kaufman Hall's National Hospital Flash Report.
The Kaufman Hall median hospital operating margin index was -1.6% for January through October, not including federal funding from the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). With the funding, the median margin was 2.4%. Operating margin dropped from 75% to 69.4% compared with the same period last year, and from 10.6% to 9.2% year-over-year without CARES Act funding. With the federal aid, the operating margin fell from 20.4% to 18.7% year-to-date and from 9.7% to 8.5% below October 2019 levels.
Gross operating revenue (not including CARES Act funding) dropped 4.8% from January to October compared with the same period in 2019, but it was flat compared with October 2019. Fewer outpatient visits were a major contributor. Furthermore, expenses rose as hospitals continue to bring back furloughed workers, purchase drugs, buy personal protective equipment, and procure other supplies needed to care for patients with COVID-19.
Expenses will continue to mount related to COVID-19, while operating margins and revenues are predicted to continue as they have. Rising COVID-19 rates mean patients delay nonurgent procedures and outpatient care, Kaufman Hall said.
