- COVID-19 hospitalizations rose 25% in November, causing hospital margins to narrow as systems continued grappling with escalating expenses and nationwide labor shortages, according to Kaufman Hall’s latest national hospital flash report out Tuesday.
- The highly contagious omicron variant hadn’t surged yet in the U.S. in November, though virus concerns drove volume declines month over month across most metrics, the report found.
- Expense growth continues to outpace revenue growth, with labor expenses in particular continuing to climb. Labor expenses per adjusted discharge were up 2.7% month over month in November, and up 26.4% compared to pre-pandemic levels.
Labor strains continued driving operational and financial challenges for hospitals in November amid the "Great Resignation," as the U.S. job market faces significant churn amid COVID-19.
A record 4.5 million people quit their jobs in November. Healthcare and social assistance workers had the second highest quit rate across all industries at 6.4%, according to preliminary data from the Bureau of Labor Statistics.
"Hospitals are grappling with higher labor costs despite lower staffing levels, due to intense competition for qualified healthcare workers," Erik Swanson, a senior vice president of data and analytics with Kaufman Hall, said in a release on the report. "In addition, the highly contagious Omicron variant could put more pressure on hospitals in months to come."
That, coupled with supply chain issues, continue driving up expenses for hospitals, as per-patient expenses rose across all measures in Kaufman Hall’s report, which uses data from more than 900 hospitals.
And in another stressor, volumes fell slightly during the period despite systems reporting recent rebounds in some service lines, such as emergency departments.
Discharges, adjusted discharges and adjusted patient days decreased 4.8%, 3.9% and 2.4% month over month, respectively.
Higher acuity cases requiring longer stays led average length of stay to increase 0.8% month over month.
But overall, lower volumes drove a slight decrease in total hospital revenues in November, according to the report.
Compared to the month prior, gross operating revenue not including federal relief funding declined 0.6%, inpatient revenue dropped 2.6% and outpatient revenue dropped 0.7%.
However, year-to-date and year-over-year revenues remained elevated compared to both 2019 and 2020 levels for the ninth month in a row.
In a bright spot, hospital operating margins actually improved, up 8.1% from the month prior following two months of sequential declines, the report found.
Though operating margins improved for hospitals in November, it's still down significantly from pre-pandemic levels, with the median change in operating margin down 22.1% compared to November 2019 without including federal relief funding, according to the report.