April 2020
EBITDA Margin by Region *
Hospitals across all regions of the country saw margin results fall both year-over-year and to budget in March. The Northeast/Mid-Atlantic took the biggest hit, as those states were among the first to issue stay-at-home orders the second half of March (following California’s lead), and the region continues to see the highest concentrations of COVID-19 in the country.
Hospitals in the Northeast/Mid-Atlantic saw Operating EBITDA Margin fall 167% compared to March 2019, or 13 percentage points in absolute change, and 172% to budget. The declines were due in part to the region having some of the most significant decreases in surgery volumes for the month, coupled with increases in labor and non-labor expenses.
Hospitals in the South saw Operating EBITDA Margin declines of 94% year-over-year (15 percentage points) and down 98% to budget. While still significant, Operating EBITDA Margin declines were the least or hospitals in the Great Plains, where they fell 87% (8 percentage points) year-over-year and 114% to budget.
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Absolute Change
National Margin Observations
March was a devastating month for the healthcare industry, as hospitals across the country felt the first shockwaves from the COVID-19 pandemic. In a matter of weeks, income fell dramatically, plunging non-profit hospitals that historically operate on thin margins solidly into the red.
Median Operating Margins fell to -8% in March for hospitals nationwide, down from 4% in February. The impact likely was more significant for broader health systems, which typically include considerable physician and ambulatory operations outside of hospitals. Across-the-board volume declines were a major contributor, as providers postponed elective procedures to free up capacity and equipment for COVID-19 patients, and individuals cancelled appointments for fear of contracting or unwittingly spreading the virus. Revenues fell dramatically below budget expectations, down 13% for inpatient revenue and down 17% for outpatient revenue in absolute change.
Despite seeing significantly fewer patients, expenses were either flat or up. This stark imbalance illustrates that hospitals were unable to reduce expenses as they maintained front-line caregivers in anticipation of mounting numbers of COVID-19 cases, and organizations incurred added expenses to maintain and expand inventories of drugs, supplies, equipment, and capacity in preparation for a surge.
Operating Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) fell 100% compared to the same period last year, or 13 percentage points in absolute change. For example, a hospital that had an EBITDA Margin of 8% dropped to –5%. Operating Margin dropped even more, at 150% or 14 percentage points year-over-year, and about 140% or 11 percentage points month-over-month.
Further reflecting the dramatic and unanticipated nature of the pandemic’s widespread impacts, Operating EBITDA Margin fell 107% (14 percentage points) below budget expectations in March, while Operating Margin was more than 170% (15 percentage points) below budget.

These impacts occurred in just a matter of weeks in March, and represent only the beginning of the pandemic’s broader effects on the industry. The impacts likely will be more significant moving forward.
Unless noted, figures are actuals and medians expressed as percentage change
Budget Variance
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Year Over Year Distributions
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Operating EBITDA Margin
Operating Margin
Unless noted, figures are actuals and medians expressed in basis points
Margin % Change
Margin Absolute Change
Budget Variance
Month Over Month
Year Over Year
Year Over Year Distributions
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Operating EBITDA Margin
Operating Margin
EBITDA Margin by Bed Size
Operating EBITDA Margins also saw sizable declines across all bed-size cohorts. Results were relatively clustered, with hospitals with 500 beds or more seeing the biggest year-over-year decline at 118%, and down 111% to budget.
Hospitals of 0-25 beds saw a decline of nearly 90% year-over-year and was down 126% to budget. The impacts of these decreases on the nation’s smallest hospitals could be dire, as they typically are at higher risk with fewer financial resources to draw upon in a downturn.
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Absolute Change
©2020 Kaufman, Hall & Associates, LLC
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