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U.S. Hospitals Struggle amid Omicron’s ‘Tidal Wave’

Escalating labor expenses, declining volumes pose challenges during latest COVID surge

March 03, 2022

The latest Kaufman Hall National Hospital Flash Report outlined a difficult first month of 2022 for U.S. hospitals amid a “tidal wave” of COVID-19 cases, rising labor costs, and the cancellation of scheduled procedures.

Hospital margins, outpatient volumes, and revenues all declined during January, while labor expenses rose significantly during the Omicron surge, according to the report released this week.

“While COVID-19 cases have swiftly declined since peaking in mid-January, the effects of the sudden and sizable margin and outpatient volume declines will be felt throughout 2022,” Erik Swanson, senior vice president of data and analytics with Kaufman Hall, said in a statement.

Here are a five key insights from the monthly report:

  • Rising expenses:  From December to January, hospitals’ labor expense per adjusted discharge increased 14.6 percent. Total expense per adjusted discharge increased 11.6 percent
  • Pausing scheduled procedures:  Outpatient revenue declined 7.5 percent from December to January. Operating room minutes fell 15.7 percent in that time and were down 20.4 percent compared to January 2020
  • Plummeting margins:  Without federal COVID-19 funding, the median change in operating margin dropped 71.3 percent from December to January
  • Omicron’s ‘tidal wave’:  COVID-19 cases reached an all-time high of 807,115 on January 15. Hospitalizations reached 21,622 on January 15. Cases and hospitalizations declined rapidly during the second half of the month
  • More acute patients:  The average length of stay jumped 8.6 percent from December to January and was up 4.9 percent year-over-year. The average length of stay increased 17.2 percent compared to January 2020

“Consistent with past surges, hospital performance likely will stabilize somewhat in coming months as a result, but January’s losses could have repercussions throughout 2022," the report notes.

HAP continues to advocate for resources and support to ensure Pennsylvania’s hospitals and their outstanding teams can provide high-quality care in the communities they serve.

Kaufman Hall’s monthly report draws on data from more than 900 hospitals and is available online.