Report: Hospital margins declined during pandemic, not yet recovered

Editor's Note

Hospital margins are off to a rough start this year, reports Becker’s Hospital Review March 30. According to a March 28 report by Kaufman Hall, the “median operating margin for hospitals and health systems” was down by 11.8% compared to February 2021 and by 42.4% compared to February 2020.

This month-to-month comparison for February 2022 against mid-pandemic (February 2021) numbers and just before the start of the pandemic (February 2020) shows that margins continue to decline. For 2022 so far, “the median operating margin remained negative for the second month in a row,” with February showing a slight improvement against January, at -3.45% vs. -4.52% respectively.

The report further noted that several factors could continue to contribute to operational losses and a slower-than-expected recovery from the Omicron surge. Some of the factors include:

• fewer severely ill COVID-19 patients being admitted
• shorter hospital stays (average length of stay was also down in February by 5.3%)
• new variants leading to new surges
• labor shortages and other staffing challenges (eg, agency costs, overtime, and inflated salaries)
• supply chain issues

“Several hospitals and health systems, including Renton Wash.-based Providence and Detroit-based Henry Ford Health, ended 2021 with operating losses,” Becker’s reported.