End-of-year hospital performance dips

Hospital performance took a dive toward the end of 2019, according to the latest National Hospital Flash Report from Kaufman Hall.

The report noted a “significant weakening,” largely as a result of declines in volumes and revenues coupled with higher-than-expected labor and non-labor expenses. Purchased services also jumped during the month. Still, non-operating labor markets remained strong during November, with the U.S. adding 266,000 jobs across the economy and unemployment dropping to 3.5%.

In fact, Hospital EBITDA margin dropped 14.5% in November 2019 from the previous year, or about 200 basis points. Operating margin was down 21.3%, or roughly 208 basis points year over year.

Compared to the previous month, operating EBITDA margin dropped 14.3%, or 216 basis points, while operating margin was down 23.4%, or 240 basis points.

The drop in profitability was somewhat attributed to volumes falling across the nation in November year over and year and compared to the previous month. The monthly declines were sharper, with operating room minutes declining 9.4% compared to October. Adjusted discharges were down 8.5% month over month and adjusted patient days declined 7.6%. Adjusted discharges were flat on a year-over-year basis while adjusted patient days were up slightly 0.5%. However, average length of stay did increase 1.5% month over month.

In addition, revenues were weak during the month, with the net patient service revenue per adjusted patient discharged up only 0.3% for the year and 1.4% from October to November, the report found. Revenue performances were mixed by regions, with performance up in the South and Northeast/MidAtlantic regions. The Great Plains had a significant drop, the Midwest had a mixed month and the West was flat.

At the same time, expenses for labor and non-labor rose nationwide. Total expense per adjusted discharge rose 2.7% year over year in November and 5.2% month over month. Labor expense per adjusted discharged rose 4.9% year over year and 7.3% month over month, while non-labor expense per discharge was up 2.8% year over year and 5.1% from the previous month.