- Operating margins rose at U.S. hospitals in December following volume and revenue declines and increased expenses that weakened November performance, according to Kaufman Hall's National Hospital Flash Report released Wednesday.
- Hospitals saw increased volumes and revenues in December despite increases in bad debt and charity care, along with mixed performance on expenses.
- Operating room minutes saw the most significant year-over-year increase in terms of volume metrics at 5.7%, while emergency departments saw the most significant month-over-month increase at 11.3%.
Following November's declines, hospitals across the U.S. saw an uptick in average operating margins in December 2019, according to the report that analyzes monthly data from 800 hospitals.
The median operating margin before interest, taxes, depreciation and amortization rose 17.4% month over month in December and 7.7% year over year. The median operating margin increased 21.7% month over month and 18% year over year.
The only hospitals to perform below budget for December were the largest — those with 500 beds or more — although those across all bed sizes saw EBITDA margins rise year over year. The largest hospitals also saw their first year-over-year EBITDA margin increase in six months.
Higher volumes and revenues overall contributed to December's uptick, including a 5.7% year-over-year increase for operating room minutes and 11.3% month-over-month increase in emergency department minutes. Discharges increased slightly along with average length of stay.
Revenue performance for December was somewhat mixed, as net patient service revenue per adjusted discharge rose. Hospitals also saw expenses increase year over year across most metrics in December, but saw declines month over month.
While most for-profit chains have yet to release their 2019 fourth quarter earnings, Kaufman's figures mirror one that has. The nation's largest hospital operator, HCA, reported widespread volume growth at the end of last year, including a nearly 7% year-over-year jump in ER visits.
While Kaufman analysts said margins should continue to increase year over year, they're likely to decline month over month.
Looking forward, hospitals can expect to see higher volumes as the flu season continues. According to data from the Centers for Disease Control and Prevention, an estimated 180,000 to 310,000 patients have been hospitalized with the flu from Oct. 1, 2019, to Jan. 25.
The presidential election also kicked off this week with the Iowa Caucuses and healthcare was a leading issue. Fitch ratings warned recently that some leading democratic proposals, if implemented, would have considerable credit implications for nonprofit hospitals, particularly if "Medicare For All" were to replace commercial insurance payments.