2019 Year-In-Review
Margin
EBITDA Margin by Region ?
Margin performance by region was generally favorable in 2019 compared to 2018. Operating EBITDA Margin was up year over year and above budget in the South, West, and Great Plains. The Great Plains saw the greatest year-over-year increase, up 8.6 percent over 2018, and 16.4 percent to budget. The Great Plains also had the greatest year-over-year increases of any region for both Adjusted Discharges and Adjusted Patient Days in 2019. The improved volume performance and lower-than-expected labor costs contributed to the region’s healthy margin results, despite relatively poor revenue performance for the year, and a significant increase in Bad Debt and Charity care.
The Midwest was up year over year but below budget. The Northeast/Mid-Atlantic was down -6.4 percent year over year and -3.5 percent below budget, due to increased labor and non-labor expenses, and decreased volumes.
% Change
Absolute Change
National Margin Observations
Hospitals across the country saw improved margin performance in 2019 over 2018. Operating Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) rose 2.0 percent or 39 basis points (bps) compared to 2018, while Operating Margin increased 7.4 percent or 78 bps. Contributing factors include modest revenue gains and some volume increases, despite across-the-board increases in both labor and non-labor expenses for the year.
Even so, margin performance was generally below budget expectations. Operating EBITDA Margin was down -1.7 percent (-21 bps) compared to budget in 2019, while Operating Margin was -0.3 percent (-1 bps).
Unless noted, figures are actuals and medians expressed as percentage change
Margin % Change
Budget Variance
Year Over Year
Operating EBITDA Margin
(1.7%)
2.0%
Operating Margin
(0.3%)
7.4%
EBITDA Margin by Bed Size
Margin performance by hospital bed-size cohorts was mixed. Hospitals with 0-25, 100-199, and 300-499 beds all were up year over year in 2019. Hospitals with 100-199 beds saw the greatest year-over-year increase, up 8.1 percent compared to 2018, but performed -7.5 percent to budget. Multiple factors contributed to the cohort’s margin results, including significant year-over-year increases in Discharges and Adjusted Discharges, and higher-than-expected revenue increases.
Hospitals with 26-99, 200-299, and 500 beds or more all were down year over year and below budget. Hospitals with 200-299 beds saw the greatest year-over-year decrease at -5.3 percent compared to 2018, and fell -4.8 percent below budget, due to decreased volume performance and higher expenses for the year.
% Change
Absolute Change
Margin Trends
Operating EBITDA Margin performance generally was above 2018 levels throughout 2019, but the gap narrowed toward the end of the year. While most months saw favorable performance over 2018, margin performance declined significantly in August and November, pulling the overall year-over-year performance down.
Operating Margin saw a similar trend, with favorable performance nine months, but flat-to-declining performance in January, August, and November.
EBITDA
Operating Margin
©2018 Kaufman, Hall & Associates, LLC
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