Dive Brief:
- U.S. hospitals saw their operating margins on an EBITDA basis plummet 174% last month compared to April 2019 and 118% from March of this year as surgeries, emergency room visits and outpatient appointments decline drastically during the pandemic, according to a Kaufman Hall report published Thursday.
- Outpatient revenues were down 50% year over year and inpatient revenues declined 25%. But expenses "remained stubbornly high" in April, with total expense per adjusted discharge rising nearly 60% from the prior year period, according to the data.
- A separate report out this week from Guidehouse found hospital executives see a long road ahead. Half of the 174 surveyed said they think it will take at least through the end of the year before elective procedures return to pre-pandemic levels. Only one in five believe their organization will return to primary onsite work arrangements.
Dive Insight:
Evidence of the disastrous effect the novel coronavirus has had on hospital finances in the United States continues to pile up. First quarter reports from for-profit and nonprofit systems alike have shown major drops in patient volume and revenue.
Kaufman Hall's research points to even worse second quarter reports, as dismal metrics from March fell even further in April. "If these trends continue at our hospitals, the domino effect on the nation's economy and the broader healthcare system could be catastrophic," the authors wrote.
Some hospitals are returning to elective procedures put on hold as they made space for surges of COVID-19 patients, but surveys have shown some patients still wary of going to a hospital for non-emergency care.
Operating minutes in April were down more than 60% and adjusted discharges and patient days each decreased about 40%, according to Kaufman Hall.
In the interim, many providers have turned to telemedicine, a trend that could continue even as the crisis becomes less pronounced. The Guidehouse survey found 67% of executives said their organization will use telehealth at least five times as much as before the pandemic. About a third, however, said they did not have the needed capabilities to do so.
Congress has appropriated $175 billion to providers to deal with coronavirus-related costs so far, but further legislation appears to be on the backburner, despite pleas from hospitals and medical practices that more is needed.
Nearly 70% of the executives in the Guidehouse survey said federal funding won't cover the additional costs from COVID-19 but helps some, while 20% said it will cover most and 11% said it will be enough. Another 70% said the pandemic does not change their organization's M&A plans going forward.
When it came to cost reduction strategies, the executives were mostly likely to eye capital expenditures as a place to cut, followed by labor and purchased services. For revenue growth, digital and service line strategies topped the list.
