- Hospitals' margins, outpatient volumes and revenues all dropped while expenses rose in January, as the highly contagious omicron variant spread and COVID-19 cases and hospitalizations peaked, according to Kaufman Hall's National Hospital Flash Report.
- Ongoing expense increases and abrupt volume shifts led the median change in operating margin without accounting for relief funds to drop more than 70% from December to January, according to the report.
- Outpatient care delays from December to January led outpatient revenue to drop 7.5% while inpatient revenue rose 2.7%, according to the report.
As systems finish reporting their financial earnings for the fourth quarter and full year of 2021, the findings paint a fuller picture of the omicron variant's impact during the first month of 2022.
Kaufman Hall's report, which draws on data from more than 900 hospitals across the country, found providers and patients again delayed nonurgent care, including outpatient care, either to mitigate the spread of the virus or preserve resources for patients with more urgent needs.
In January, actual hospital margins were negative for the first time in 11 months as a result of the omicron headwinds.
The median Kaufman Hall Operating Margin Index was -3.68% for the month, and when including federal relief funds, it was still -3.3%.
Volumes shifted elsewhere during the period as outpatient care revenue fell and inpatient care revenue rose. Meanwhile, operating room minutes fell nearly 16% from December to January and more than 20% compared to January of 2020.
Sicker patients also required longer hospital stays, with patient days up 1.7% and average length of stay up 8.6% from December to January.
At the same time, heightened expenses have been an ongoing challenge for operators amid labor shortages and supply chain issues.
Total expense per adjusted discharge rose 11.6% from December to January, in large part due to a 14.6% jump in labor expense per adjusted discharge, Kaufman Hall found.
Non-labor expense per adjusted discharge also rose 7.8% during the period.
"While COVID-19 cases have swiftly declined since peaking in mid-January, the effects of the sudden and sizable margin and outpatient volume declines will be felt throughout 2022," said Erik Swanson, senior vice president of data and analytics with Kaufman Hall.