Hospitals, physician groups recovering from pandemic lows

Hospitals, health systems and physician groups saw big gains in May compared to the same month in 2020 when COVID-19 pandemic lockdown measures were in place. 

Compared to 2020 levels, healthcare providers experienced higher volume and improved margins. However, levels are still down compared to 2019, according to two recent reports from Kaufman Hall. The recent findings reveal good news for the health care sector, which was hit hard by the pandemic as offices closed and elective procedures, as well as routine healthcare services, were put on hold. 

Hospitals still report narrow margins despite higher patient volumes, with a 2.6% operating margin in May when excluding funding from the Coronavirus Aid, Relief, and Economic Security (CARES) Act. However, the average Operating Margin rose 95.2% from January to May 2021 compared to the same period in 2020 without CARES funding, the report found.

“The data reflect an encouraging trajectory for our nation’s hospitals and health systems, as they continue to recover from the devastation of COVID-19,” said Erik Swanson, a senior vice president of data and analytics with Kaufman Hall. “We expect to see gains over the lows seen in early 2020, but comparisons to 2019 provide greater insights to how hospitals are faring relative to pre-pandemic performance.”

For physician groups, key performance metrics have continued to return to pre-pandemic levels, Kaufman Hall found. Physician productivity, revenues and compensation recovered during the first quarter of the year and continued to rise slightly in May.

Compared to the first quarter of 2020, net revenue per physician FTE (including advanced practice providers or APPs) was up 9.4%, reaching $575,113 in the first quarter of 2021.

“The first quarter results show positive signs of stabilization for the physician groups across the country after many months of turmoil from COVID-19,” said Kaufman Hall Managing Director Matthew Bates. “Going forward, they face new uncertainties as expenses continue to rise, the number of employed physicians grows, and the average investment needed to subsidize physician revenues remains at unsustainable levels.”

At the same time, the COVID-19 pandemic continues to improve in the U.S. “The 7-day moving average of new COVID-19 cases fell 63% over the course of the month, from 49,478 on May 1 to 18,134 on May 31,” Kaufman Hall reported. New hospital admissions for COVID-19 cases fell 44% from the beginning of May through the end of the month, as well. 

Unfortunately, the pace of vaccinations in the nation has slowed, with the 7-day moving average of doses administered falling 60%, from 2.3 million on May 1 to 930,703 on May 31. Just more than 66% of U.S. adults have received at least one COVID-19 vaccine dose as of June 28, according to the Centers for Disease Control and Prevention. The number of COVID-19 deaths in the U.S. rests just above 601,000.

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