KEY METRICS FOR DOCS, HOSPITALS NEAR PRE-PANDEMIC LEVELS

June 30, 2021 - Hospital margins remained narrow despite in May rising patient volumes.

KEY TAKEAWAYS

  • Even with the strong showing in May, however, volumes and margins remain below early 2019 levels and expenses continue to grow.
  • Employed physician groups saw gains in productivity, revenues, and compensation in the first quarter of 2021 compared to the same period in 2020, due in part to higher patient visits.
  • The average hospital operating margin rose 95.2% from January to May 2021 compared to the same period in 2020 without CARES, and 56.6% year-to-date with CARES.
  • Compared to pre-pandemic levels in the first five months of 2019, however, operating margins were down 20.5% YTD without CARES and down 9% YTD with CARES.

Physician compensation and hospital volumes, revenues, and margins all saw strong gains in May, signaling that the healthcare sector may be returning to pre-pandemic levels, two reports Monday from consultants Kaufman Hall suggest.

Even with the strong showing in May, however, volumes and margins remain below early 2019 levels and expenses continue to grow, according to the June issue of the National Hospital Flash Report.

Meanwhile, employed physician groups saw gains in productivity, revenues, and compensation in the first quarter of 2021 compared to the same period in 2020, due in part to higher patient visits.

At the same time, the average investment required to supplement physician revenues fell slightly, according to the latest Physician Flash Report.

"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," Erik Swanson, a senior vice president of Data and Analytics with Kaufman Hall, said in a media release. "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."

Hospital margins remained narrow despite rising patient volumes. The median Kaufman Hall hospital operating margin index was 2.6% in May, not including federal Coronavirus Aid, Relief, and Economic Security (CARES) Act funding.

With the funding, it was 3.5%. The average operating margin rose 95.2% from January to May 2021 compared to the same period in 2020 without CARES, and 56.6% year-to-date with CARES. Compared to pre-pandemic levels in the first five months of 2019, however, operating margins were down 20.5% YTD without CARES and down 9% YTD with CARES.

Patient volumes increased YTD compared to low levels seen with national shutdowns and restrictions on non-urgent procedures early in the pandemic. However, volumes were down compared to 2019 levels in most cases.

Adjusted discharges were up 9.1% YTD from January-May 2020, but fell 7.1% YTD compared to January-May 2019. Adjusted patient days rose 14.3% YTD from 2020 to 2021, but were close to pre-pandemic performance—down only 0.4% YTD compared to the first five months of 2019.

Emergency department visits were essentially flat compared to January-May 2020, but remained significantly below 2019 rates, while operating room minutes grew 28.3% YTD in May compared to 2020 and were close to 2019 levels.

Revenues and expenses both increased compared to the first five months of 2019. Gross operating revenue (not including CARES) was up 18.6% YTD from 2020, and 5.9% YTD from 2019. Total expense per adjusted discharge was down 1.7% YTD from January-May 2020, but up 16.6% above January-May 2019.

PHYSICIAN COMP

For physician groups, the median investment/subsidy per physician full-time equivalent (FTE) was $239,502 for the first quarter of 2021, down just 1.9% from the first quarter of 2020.

Physician comp per FTE was $332,187 in Q1 2021, up just 1.1% from the same period in 2020. Increasing patient visits contributed to an increase in physician productivity, with physician work Relative value units (wRVUs) per FTE up 3.6% from Q1 2020 to Q1 2021.

Net revenue per physician FTE (including advanced practice providers or APPs) was $575,113 in the first quarter, up 9.4% from Q1 2020, and total direct expense per physician FTE (including APPs) was up 4% over the same period.

Clinical and front-office productivity has largely returned to pre-COVID levels as physician productivity has increased, with Support Staff FTEs per 10,000 wRVUs falling just 1.3% from the first five months of 2020 to the same period in 2021, KH said.

"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." ERIK SWANSON, KAUFMAN HALL

Posted on: HealthLeaders Media
Analysis By: John Commins




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