Mixed Results as Expenses Rise and Delta Variant Takes Hold
Recovery of hospital revenue to pre-pandemic levels is at risk according to a recent report from consultants Kaufman Hall. Rising expenses and increasing COVID hospitalizations threaten to reverse gains from the latter half of 2020 and the first half of 2021. June showed mixed metrics with margins at 2.8% in June (4.3% including Federal CARES Act funding). Through the first six months of 2021, operating margins rose 89.5% compared to the same period in 2020 but are still down 10.3% compared to the first half of 2019. The Federal CARES Act continues to offset the loss of operating margin. When accounting for Federal CARES Act funding, operating margins rose 3.7% YTD compared to 2019.
Notably, revenue is up 3% even from 2019 levels, but expenses are also up. While expenses are lower than early 2020 levels when hospitals took on the expenses of personal protective equipment and supplies to care for the surge of COVID-19 patients, expenses in 2021 YTD are up 15% compared to 2019. Similarly, patient volumes have gained ground from 2020 levels but still fell short of 2019 levels.
The report projects an outlook of uncertainty as the Delta coronavirus variant spreads and immunization rates are both slowing and inconsistent across various geographies. COVID-19 cases, which peaked in January 2021 at a 7-day moving average of just over 250,000 new cases before declining, are on the rise again. After reaching a low of just under 12,000 cases (7-day moving average) in June, new cases were above 130,000 in mid-August and steeply rising. As cases continue to rise, immunization rates have fallen from a 7-day moving average of nearly 3.5 million in mid-April of this year to a low of roughly 440,000 in the beginning of July. The CDC currently reports total vaccinations at 72.5% of adults with at least one vaccination shot.
In the current and ongoing state of uncertainty, it will be important for hospitals to have clear and current visibility into financial performance. Revenue cycle resiliency will further help to ensure that hospitals are maximizing revenue, especially as margins remain thin and expenses high.
From increased accuracy and labor savings with the use of automation to monitoring claim performance with analytics, healthcare organizations must put revenue cycle resiliency front and center. Learn how to mitigate the impact of four key market forces to ensure consistent revenue and build resiliency here.
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