Not including federal relief aid, hospital operating margins remained narrow in March at just 1.4 percent, according to a recent report from healthcare consulting firm Kaufman Hall. Including federal relief aid, the median hospital operating margin was 2 percent.
Although margins remained narrow in March, hospitals saw year-over-year margins starkly increase. In particular, operating margin increased 14.5 percentage points year-over-year in March, without federal relief aid.
The sharp increase was attributed to measuring March 2021 performance against the same period last year, when hospitals faced losses amid national shutdowns of elective procedures.
Kaufman Hall noted that the median operating earnings before interest, taxes, depreciation and amortization margin also rose 13.3 percentage points in March, compared to March of 2020.
“We expect to see additional margin gains in the months ahead, especially in comparison to record-poor performance in the early months of the pandemic,” said Jim Blake, managing director at Kaufman Hall. “Over the course of 2021, however, we project hospital margins could be down as much as 80 percent, and revenues down as much as $122 billion compared to pre-pandemic levels, as hospitals continue to feel the dire repercussions of COVID-19.”
Hospitals also saw their adjusted discharges, emergency room visits, adjusted patient days and average length of stay increase year over year in March, Kaufman Hall noted.