Hospital Snapshot: End of COVID-19 PHE, Inflation Challenge Hospital Finances

May 31, 2023

Inflation and the end of the COVID-19 public health emergency (PHE) have forced hospitals to navigate an uncertain financial picture, according to a new Kaufman Hall report.

Released today, the latest National Hospital Flash Report indicates hospitals have little or no financial flexibility to manage the changes stemming from the end of the PHE and other inflationary pressures. The report also notes the number of patients enrolled in Medicaid coverage may decline significantly this year due to the end of the pandemic-era policy allowing continuous enrollment.

“Hospital and health system leaders must figure out how to navigate the new financial reality and begin to take action,” said Erik Swanson, senior vice president of data and analytics with Kaufman Hall. 

Here’s what you need to know:

• Margins stay level:  Hospitals had a median operating margin of 0 percent during April, “leaving most hospitals with little to no financial wiggle room.”
• Expenses:  During April, year-to-date labor expenses per calendar day were up 20 percent compared to 2020.
  • Year-to-date supply expenses per calendar day were up 26 percent compared to 2020 levels, as well.
• Volume:  Per calendar day, hospital discharges (-4%) and equivalent patient days (-2%) declined month-over-month during April.
  • Average length of stay increased 1 percent month-over-month.
• Revenues:  Hospitals’ net operating revenue per calendar day declined 5 percent month-over-month, with inpatient and outpatient revenue both declining 4 percent.
• Quotable:  “In the face of operating margins that may never fully recover and inflated expenses, developing and executing a strategic path forward to a future that is financially sustainable is crucial,” Swanson said.

HAP continues to advocate for resources to ensure hospitals can continue to deliver outstanding care in their communities. The latest Kaufman Hall flash report includes data from more than 900 hospitals across the U.S. and is available to review online.