News: Hospital revenues declined drastically in April, analysis shows
Despite the previous small rebound in March, the latest National Hospital Flash Report from Kaufman Hall shows hospitals’ median operating margins declined in April. Additionally, the median chance in operating margin decreased 38.1% from March to April this year, and patient volumes and days spent in the hospital decreased 5.7%. While these drops occurred, expenses barely eased for hospitals.
The biggest factor at play for this downturn is said to be patient behavior, as many patients choose to delay care in the face of financial problems and COVID surges. “We see these general waves or surges of hospitalizations primarily attributable to these COVID-19 cases,” Erik Swanson, senior vice president of data and analytics at Kaufman Hall, told HealthLeaders. “As those waves begin to rise, you tend to see a bit of a pullback on volumes." This was seen earlier in the year during the omicron wave, where revenue and patient volume dropped, until the wave subsided, and a small rebound occurred in March.
These fluctuating volumes can make managing expenses a challenge. "Sicker patients come with higher resource utilization, thus driving much of the expense increases as well," Swanson said. "So, not only are there some larger macro-economic factors at play on the expense side, but as the sicker patients come in, they often require more expensive drugs and supplies, more advanced care, and tend to be a bit more expensive."
Hospital expenses have been further exacerbated by labor shortage and supply chain issues. To ease the burden, Swanson suggested some larger hospital systems strategies that others could utilize, such as:
- Having internal staffing agencies evaluate where to send nurses and staff across the system, instead of becoming solely dependent on contract labor and traveling nurses
- Looking at their internal revenue cycle for improvement, particularly to improve collections rates
- Renegotiating with payers as aggressively as possible to get the best rates
- Embracing more data-driven predictive type models that can help them better optimize their workforce to plan for the ebbs and flows of volume