Dive Brief:

• Hospitals faced a setback in their volume and margin recoveries in July as cases of the coronavirus delta variant rapidly spread across parts of the U.S., according to Kaufman Hall's latest monthly flash report out Tuesday.
• Revenues, however, surpassed both 2019 and 2020 levels for the fifth month in a row, though they were offset by rising expenses, also in line with recent months.
• July's figures suggest patients might again be delaying non-urgent care due to virus concerns, the report said. Hospitals in several states have reported reducing available services as they struggle to find available beds and staff.

Dive Insight:

Hospital volumes that appeared on the rebound this summer are back on shaky ground with rising cases of the highly contagious delta variant. That includes outpatient care, which grew steadily in the first half of the year.

Outpatient revenues fell 2% in July from June, while inpatient revenues grew as a portion of overall revenue, according to Kaufman Hall's report.

Discharges and emergency room visits rose month over month, 4.9% and 4.1%, respectively, while operating room minutes fell 5.9%.

The South saw the largest year-over-year increase in patient days and average length of stay in July, according to the report. That's likely due to higher-acuity COVID-19 patients who require more care for longer periods of time, and the region also experienced the biggest year-over-year drop in margins, the report found.

"Not surprisingly, hospitals in the regions with the highest rates of the variant were most affected in July, and we expect those impacts to deepen in the months ahead," Erik Swanson, senior vice president of data and analytics at Kaufman Hall, said in the report.

Margins overall remained tight in July — the median hospital operating margin index was 3.2% when excluding federal coronavirus relief funds.

Despite the setbacks, hospitals are still doing much better overall than they were during this time last year.

While outpatient revenue was down in July, it was still up 21.6% year-to-date compared to 2020. Adjusted discharges, too, were up 8.7% in July compared to January through July of 2020, and emergency room visits were up 5% in July compared to that period.

But many metrics still remain below pre-pandemic or 2019 levels and the virus still poses challenges.

"Hospitals likely will face additional setbacks with continued spread of the delta variant and concerns over diminishing protection from the COVID-19 vaccines," Swanson said.