Category Archives: Expense Reduction

Hospital margins see eleventh-hour improvement

Posted on by • Posted in Access, Access & Quality of Healthcare, Expense Reduction, Health System, Hospital, Hospital Industry, Inpatient Care, Operating Expense Reduction, Operating Expenses, Operating Income, Operating Margin, Operating Metrics, Operating Performance, Operating Revenue, Outpatient Care • Leave a comment
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Hospitals experienced a slight boost to operating margins in November, but not enough to restore the median negative margins that persisted for 2022 to date.

Kaufman Hall’s December “National Flash Hospital Report“ — based on data from more than 900 hospitals — found hospitals’ median operating margin was -0.2 percent through November, a slight improvement from the median of -0.3 percent recorded a month prior. 

A 1 percent decline in expenses from October to November drove the eleventh-hour improvement to margins and tipped the scales on hospitals’ relatively flat revenue. Additionally, hospitals saw labor expenses decrease 2 percent in November, potentially driven by less reliance on contract labor. 

The median -0.2 percent margin recorded in November 2022 marks a 44 percent decline for margins in 22 year-to-date compared to 2021 year-to-date. Kaufman Hall’s index shows hospitals’ median monthly margins have been in the red throughout 2022, starting with the -3.4 percent recorded in January, driven by the omicron surge. November is tied with September as hospitals’ best month of the year, with both sharing a median margin of -0.2 percent. 

Outpatient care marks one of the brighter spots for hospitals’ finances, with outpatient revenue up 10 percent year-over-year while inpatient revenue was flat over the same time period. 

“The November data, while mildly improved compared to October, solidifies what has been a difficult year for hospitals amidst labor shortages, supply chain issues and rising interest rates,” Erik Swanson, senior vice president of data and analytics with Kaufman Hall, said. “Hospital leaders should continue to develop their outpatient care capabilities amid ongoing industry uncertainty and transformation.”

2020 Hospital Operating Margins Down 96% Through July

Posted on by • Posted in Coronavirus, Cost Management, Cost Reduction, Economic Crisis, Economic Stimulus, Elective Procedures, Elective Surgery, Emergency Care, Expense Reduction, Health System, Hospital, Hospital Industry, Market Outlook, Market Trends, Market Uncertainty, Net Income, Nonoperating Income, Operating Expense Reduction, Operating Expenses, Operating Income, Operating Margin, Operating Performance, Operating Revenue, Pandemic, The CARES Act • Leave a comment

https://www.prnewswire.com/news-releases/2020-hospital-operating-margins-down-96-through-july-301116888.html

Ship in a Storm | ICOExaminer

Hospital Operating Margins have plunged 96% since the start of 2020 in comparison with the first seven months of 2019, according to a new Kaufman Hall report, as uncertainty and volatility continue in the wake of the COVID-19 pandemic.

Those results do not include federal funding from the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Even with that aid, however, Operating Margins are down 28% year-to-date compared to January-July 2019.

Operating Margins fell 2% year-over-year in July without the CARES Act relief, according to the latest edition of Kaufman Hall’s National Hospital Flash Report. Hospitals also saw flat year-over-year gross revenue performance in July, continued high per-patient expenses, and a fifth consecutive month of volumes falling below 2019 performance and below budget.

From June to July, however, hospital Operating Margins were up 24%, likely due to a backlog in demand resulting from the shutdown of many non-urgent services in the early months of the pandemic.

“COVID-19 has created a highly volatile operating environment for our nation’s hospitals and health systems,” said Jim Blake, managing director, Kaufman Hall. “Hospitals have shown some incremental signs of potential financial recovery in recent months. Unfortunately, there is no guarantee these trends will continue, and hospitals still have a long way to go to recover from devastating losses in the early months of the pandemic.”

July volumes continued to fall year-over-year, but showed some signs of potential recovery month-over-month. Adjusted Discharges were down 7% compared to July 2019, but up 6% compared to June 2020. Adjusted Patient Days were down 4% year-over-year, but up 7% month-over-month. Adjusted Discharges are down 13% and Adjusted Patient Days are down 11% since the start of 2020, compared to the first seven months of 2019.

Hospital Emergency Department (ED) volumes have been hardest hit, falling 17% year-to-date compared to the same period in 2019, down 17% year-over-year, and 13% below budget in July. Surgery volumes saw some gains with the continued resumption of non-urgent procedures pushing Operating Room Minutes up 3% month-over-month and 4% above budget in July, but they remain down 15% year-to-date.

Not including CARES Act relief, Gross Operating Revenues were essentially flat year-over-year and 2% below budget for the month, but have fallen 8% year-to-date compared to the same period in 2019. Inpatient Revenue is down 5% year-to-date and fell 3% below budget in July, but increased 1% year-over-year. Outpatient Revenue is down 11% year-to-date, 1% year-over-year, and 2% below budget.

Hospitals nationwide also continued to see higher per-patient expenses despite having fewer patients. Total Expense per Adjusted Discharge has jumped 16% year-to-date compared to the same seven-month period in 2019, and rose 9% year-over-year and 5% above budget in July. Labor Expense per Adjusted Discharge is up 18% year-to-date and rose 9% year-over-year and 5% above budget in July. Non-Labor Expense per Adjusted Discharge has increased 15% during the first seven months of 2020 and jumped 11% year-over-year and was 5% above budget for the month.

The National Hospital Flash Report draws on data from more than 800 hospitals.

 

 

 

 

Michigan Medicine accused of exploiting 1,300 resident physicians in labor dispute

Posted on by • Posted in Employee Furlough, Employee Hiring Freeze, Employee Layoffs, Employee Pay Cuts, Expense Reduction, Health System, Labor Spend Management, Labor Union, Negotiation, Physician Compensation, Physician Residents • Leave a comment

https://www.beckershospitalreview.com/hr/michigan-medicine-accused-of-exploiting-1-300-resident-physicians-in-labor-dispute.html?utm_medium=email

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The union that represents 1,300 resident physicians at Ann Arbor-based Michigan Medicine said the health system is exploiting its members as both sides negotiate a new contract, according to Michigan Radio.

The University of Michigan House Officers Association and Michigan Medicine are trying to reach an agreement before the current contract expires in late June. But compensation remains a key sticking point.

Ruth Bickett-Hickok, MD, a second-year anesthesiology resident, told reporters May 18 she’s been treating COVID-19 patients and seeks a cost-of-living raise, according to Michigan Radio.

“Frankly I’m here because, for lack of a better term, Michigan [Medicine] residents right now are being exploited for their labor. Especially during this crisis,” said Dr. Bickett-Hickok, who is on the union board. She also cited her debt load for undergraduate and medical school in her reasoning for seeking a cost-of-living raise.

Overall, the union says it wants fair wages that recognize the risks physician residents have been willing to take on during the pandemic.

In a statement provided to Becker’s Hospital Review, Michigan Medicine spokesperson Mary Masson said the health system “recognizes the important role of the [union] members” and amid the pandemic “has honored the compensation package previously proposed to the HOA, which includes salary increases.”

Ms. Masson said Michigan Medicine is undergoing a $400 million expense reduction plan with furloughs and layoffs affecting about 1,400 full-time employees. Physician residents’ salaries range from $58,500 to $82,900 annually based on experience. Ms. Masson said to provide even higher salary increases, Michigan Medicine would have to eliminate additional jobs.

The union proposes that the health system use part of the university’s endowment funds to help cover the new labor deal.