August 2020
Margin
EBITDA Margin by Region *
Without the CARES funding, hospitals in three of five regions saw Operating EBITDA Margins fall year-over-year in July. Hospitals in the Northeast/Mid-Atlantic had the greatest year-over-year decline at 30%, but were 18% above budget for the month. Hospitals in the West and Midwest also declined year-over-year, but the West was 7% above budget while the Midwest was 2% below budget.
Hospitals in the Great Plains and South performed above budget for Operating EBITDA Margins, and both regions were up 8% year-over-year for the month.
% Change
Absolute Change
National Margin Observations
Hospitals across the country continued to experience volatility in July, brought about by the ongoing impacts of the COVID-19 pandemic that continue to drive down volumes and weaken revenue performance.
Hospital Operating Margins are down a full 96% or 842 bps since the start of 2020 compared to the same seven-month period in 2019, not including federal CARES funding. Even with the funding, Operating Margins still are down 28% or 90 bps year-to-date compared to January-July 2019.
In July, Operating Margins declined 2% (36 bps) year-over-year but increased 24% (217 bps) month-over-month and were 15% above budget without CARES funding. Operating EBITDA Margins fell 5% (62 bps) year-over-year but rose 12% (191 bps) month-over-month and were 9% above budget without the aid. Whether the month-over-month gains will continue remains unknown given the many uncertainties relative to the COVID-19 pandemic, the future course of the virus, and its broader impacts.
The July year-over-year declines came as hospitals saw flat year-over-year Gross Operating Revenue performance, continued high per-patient expenses, and a fifth consecutive month of volumes falling below 2019 performance and below budget across most metrics (despite some month-over-month volume gains). Emergency Department volumes have been hardest hit, with double-digit year-over-year declines each month since March.
Margin % Change
Budget Variance
Month Over Month
Year Over Year
Year Over Year Distributions
(Click to enlarge)
Operating EBITDA Margin
9%
12%
(5%)
operating_ebitda_margin_less_cares.svg
Operating Margin
15%
24%
(2%)
operating_margin_less_cares.svg
Unless noted, figures are actuals and medians expressed as percentage change
Margin Absolute Change
Budget Variance
Month Over Month
Year Over Year
Year Over Year Distributions
(Click to enlarge)
Operating EBITDA Margin Less CARES
103
191
(62)
operating_ebitda_margin_less_cares_abs.svg
Operating Margin Less CARES
139
217
(36)
operating_margin_less_cares_abs.svg
Unless noted, figures are actuals and medians expressed in basis points
EBITDA Margin by Bed Size
Looking at hospitals by size, margins declined year-over-year in five of six bed-size cohorts.
Larger hospitals with 300-499 beds had the greatest year-over-year decreases at 14% and fell 3% below budget for the month. Hospitals with 200-299 and 500 or more beds also were down year-over-year and below budget, while hospitals with 26-99 and 100-199 beds both were above budget but down about 5% year-over-year.
The smallest hospitals of 0-25 beds were an outlier, with Operating EBITDA Margins jumping 32% year-over-year and 48% above budget in July, likely due to an increase in surgery volumes and better-than-expected revenues.
% Change
Absolute Change
©2020 Kaufman, Hall & Associates, LLC
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