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Expenses Challenge Hospitals During 2022

August 01, 2022

U.S. hospitals have faced an “enormously difficult year,” due to COVID-19 and expenses remaining near unprecedented levels, according to the latest Kaufman Hall National Hospital Flash Report.

Released today, the latest report follows a statewide analysis last week showing the surging costs affecting the commonwealth’s hospitals, including a combined $202.3 million in additional staffing costs attributable to COVID-19 during the first quarter of 2022.

Hospitals saw encouraging signs during June, with patient acuity declining and costs easing slightly. Still, they remain nowhere near their pre-pandemic levels, the report said.

“To say that 2022 has challenged health care providers is an understatement,” Erik Swanson, a senior vice president of Data and Analytics with Kaufman Hall, said in a statement.

Here's what you need to know:

  • Volumes:  Operating room minutes were up 2.4 percent from May to June but were down 4.8 percent year-over-year. Length of stay also decreased 2.1 percent from May, but was up 2.8 percent compared to June 2021.
  • Revenue improves:  Additional volume led to a 1.2 percent increase in gross operating revenue from May to June and a 4.1 percent increase year-over-year.
  • Expenses:  Total expenses were down 1.3 percent from May to June but are still up 7.5 percent from year-ago levels. Total costs are up 9.5 percent year-to-date due to inflation and labor shortages.
  • Mixed outlook:  For U.S. hospitals, the median year-to-date operating margin index was -0.09 percent. The median change in operating margin increased 30.8 percent from May, but declined 49.3 percent from June 2021.
  • Quotable:  “It’s unlikely that hospitals and health systems can undo the damage caused by the COVID waves of earlier this year, especially with material and labor costs at record highs this summer,” Swanson said.

The Kaufman Hall report includes data from 900 hospitals to provide an overview of the financial outlook for U.S. hospitals. The report is available to review online.

A national Physician Flash Report also is available.