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Report: Delta Variant Threatens Hospitals' Fiscal Recovery

Increased expenses offset revenue gains, declining operating room time may indicate delayed care

August 25, 2021

The spread of the hyper-transmissible Delta variant has created new challenges for hospitals and an uncertain fiscal outlook for the rest of the year.

In its latest hospital flash report, health care analyst Kaufman Hall indicates the Delta variant led to dramatic spikes in new COVID-19 cases and hospitalizations last month, and that increasing revenues were offset by growing expenses from higher-acuity cases. The National Hospital Flash Report includes data from more than 900 hospitals across the country.

“Hospitals likely will face additional setbacks with continued spread of the Delta variant and concerns over diminishing protection from the COVID-19 vaccines,” Erik Swanson, a senior vice president of data and analytics with Kaufman Hall, said in a statement.

Among the takeaways from the report:

  • COVID-19’s July resurgence:  Across the nation, the seven-day moving average for new COVID-19 cases increased 486 percent during July. New admissions for COVID-19 patients rose 256 percent
  • Margins improve from 2020, down from 2019:  Operating margins increased 83.9 percent year-to-date without federal COVID-19 aid compared to the pandemic’s early months, but were down 7 percent from the first seven months of 2019. Kaufman Hall’s median Operating Margin Index was 3.2 percent during July, not including federal aid
  • Expense per discharge above pre-pandemic levels:  Total expense per adjusted discharge increased 14.1 percent compared to the first seven months of 2019, but was flat compared to the same period during 2020
  • Delayed care:  Operating room minutes were flat compared to 2019 but declined 5.9 percent month-over-month, indicating patients may be delaying scheduled procedures. Inpatient discharges fell 9.2 percent compared to the first seven months of 2019

The report notes that hospitals face additional challenges in the months ahead, with the spread of the Delta variant, schools reopening, and cooler temperatures bringing more people inside.

“Not surprisingly, hospitals in the regions with the highest rates of the variant were most affected in July, and we expect those impacts to deepen in the months ahead,” Swanson said.

Throughout the pandemic, hospitals have delivered outstanding care for patients with COVID-19 and other conditions, adjusting operations to ensure safe care for everyone who comes through their doors. HAP will continue to advocate for resources to support Pennsylvania hospitals as they deliver this high-quality care throughout the commonwealth.

The Kaufman Hall report, as well as a physician group snapshot, are available online.