Dive Brief:

• Hospital margins were still tight in June as rising expenses offset rebounding volumes and revenues, according to Kaufman Hall's latest monthly flash report released Monday.
• Volumes and margins were much stronger in June than during the early months of the pandemic last year, the report found. But volumes were still well below pre-pandemic levels, as were margins when excluding federal relief funds.
• Outpatient visits in particular are on the rise and contributed to the overall revenue boost year to date, the report found. Outpatient revenues jumped the most out of all metrics, rising 24.3% year-to-date from 2020, and 9.6% from 2019.

Dive Insight:

Overall hospital metrics steadily improved in recent months as COVID-19 cases fell, but rising cases of the delta variant and slowing vaccinations make the remainder of the year less predictable, the report said.

For-profit hospitals that reported second quarter earnings posted strong results as patients returned for non-COVID-19 care that boosted volumes and revenues. And while health system revenues in June surpassed both 2019 and 2020 performance, expenses too rose above 2019 levels, the report found.

Accordingly, actual margins remain tight, especially when excluding grants from the Coronavirus Aid, Relief, and Economic Security act.

In June, the median Kaufman Hall hospital operating margin index was 2.8% when excluding relief funds. With those funds, it was 4.3%.

Operating margin jumped 89.5% year to date compared to the first six months of 2020 when not including relief funds, and with relief funds jumped 48.7% year to date.

Compared to the first half of 2019, operating margin was down 10.3% year to date without relief funds, though rose 3.7% when including the funds.

On the outpatient side, the report's year-to-date trends in outpatient visit growth mirrors color from medtech companies reporting electives rebounding in recent financial results.

Inpatient revenue was up 11.9% year to date compared to the first six months of 2020, and up 3.3% compared to 2019.

Hospitals are still experiencing heightened expenses amid the pandemic. Total expense per adjusted discharge fell 2.6% from January through June of 2021 compared to the first six months of 2020, when personal protective equipment and other costs rose substantially. But compared to the first six months of 2019, total expense per adjusted discharge through June was still up 14.5%.

Health systems also took a major hit when lockdowns and virus fears dampened volumes throughout last year, and while some services have largely bounced back, others have not. Volumes overall in June rose above 2020 levels, but still remained down compared to pre-pandemic levels, the report found.

For example, emergency room visits rose 3.2% year to date versus 2020, but were down 14.8% year to date when compared to 2019.

Meanwhile operating room minutes were up 20.4% year to date, and up 2.6% year-to-date compared to 2019.