February 2020
EBITDA Margin by Region *
Operating EBITDA Margin performance was mixed in January. Hospitals in the Midwest had the greatest year-over-year increase at 14.8 percent, but fell -6.9 percent below budget. Increases across most volume metrics and decreased expenses contributed to the region’s improved margin performance. Hospitals in the Northeast/Mid-Atlantic were up 12.9 percent year over year and 5.9 percent to budget.
Hospitals in the South, West, and Great Plains all experienced a year-over-year drop in Operating EBITDA Margin for the month, but still performed above budget expectations. The Great Plains saw the most significant drop, with Operating EBITDA Margin down -12.5 percent year over year, but 2.7 percent above budget. The region’s sizable year-over-year decline likely was driven by significant revenue declines, a drop in Discharges and Adjusted Discharges, and rising non-labor expenses.
% Change
Absolute Change
National Margin Observations
Hospitals across the country saw a downturn in margin results to start the calendar year. Operating Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) Margin was down -1.4 percent year over year in January, or -23.8 basis points (bps), but was 1.4 percent or 14.3 bps above budget expectations. Operating Margin was down -2.0 percent or -23.3 bps year over year, but also was above budget at 2.6 percent or 20.8 bps.
Looking at month-over-month results, Operating EBITDA Margin was down -4.5 percent or -68.7 bps, while Operating Margin was down -4.6 percent or -37.1 bps. The margin decreases occurred despite increased volumes for the month, and were largely driven by increased expenses, coupled with some revenue declines month over month.
Unless noted, figures are actuals and medians expressed as percentage change
Budget Variance
Month Over Month
Year Over Year
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
(Click to enlarge)
Operating EBITDA Margin
Operating Margin
EBITDA Margin by Bed Size
Hospitals across four of the six bed-size cohorts saw a year-over-year drop in EBITDA Margin in January. The exceptions were hospitals with 100-199 beds, which were up about 1.0 percent year over year, and the smallest hospitals with 0-25 beds, which were an outlier with Operating EBITDA Margin jumping 24.6 percent year over year, and performing 21.6 percent above budget. A decrease in overall expenses and in Bad Debt and Charity care, coupled with increases in key volume metrics—such as ED Visits and OR Minutes—contributed to the significant margin increase for the nation’s smallest hospitals.
Of the four cohorts that saw declines, hospitals with 26-99 beds saw the greatest year-over-year decrease of -12.4 percent, but still performed 3.7 percent to budget. This cohort also saw less-than-expected revenue performance, and increased labor expenses in January, which likely contributed to the year-over-year decline. Of the four cohorts, mid-sized hospitals with 200-299 beds experienced the greatest variance to budget of -9.5 percent, but were down just -1.6 percent year over year.
% Change
Absolute Change
©2020 Kaufman, Hall & Associates, LLC
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