June 2020
EBITDA Margin by Region *
Looking at hospitals by region, hospitals in the West, Northeast/Mid-Atlantic, and South continued to see Operating EBITDA Margin decline year-over-year and compared to budget. The West saw the most significant declines, falling 37% year-over-year and 31% below budget due to continued volume declines and higher-than-expected expenses.
Hospitals in the Midwest and Great Plains saw Operating EBITDA Margin increase both year-over-year and compared to budget. The Great Plains had the biggest increases, jumping 37% compared to May 2019 and 40% above budget, as the region saw revenues increase year-over-year despite continued volume declines and higher-than-expected expenses.
% Change
Absolute Change
National Margin Observations
Hospitals and health systems across the country saw some improvements in margin performance in May, following two months of grim performance sparked by the impacts of the COVID-19 pandemic. Most hospitals saw margin increases month-over-month. While year-over-year results were still down, the declines were much less than those seen in March and April, when steep volume and revenue declines drove margins deep into the red.
More than $50 billion in funding from the Coronavirus Aid, Relief, and Economic Security (CARES) Act provided some temporary relief, propelling the median hospital Operating Margin back into positive territory at 4% in May, compared to –8% without the funding. Similarly, the median hospital Operating Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) Margin rose to 10% in May with the CARES funding, compared to –2% without the funding. The vast majority of hospitals that received CARES funding recorded the entire amount across April and May, however, meaning the relief is only short-term unless Congress issues further funding.

Inclusive of the CARES funding, Operating Margin rose 100% or 1,892 bps from April to May, but fell 13% or 133 bps year-over-year and was 6% below budget. The results follow record-low performance in April, when Operating Margin plummeted 120% or 1,344 bps month-over-month and 282% or 3,025 bps year-over-year.
Operating EBITDA Margin rose 105% or 1,725 bps from April to May, but fell 9% or 143 bps year-over-year and 6% below budget. By comparison, Operating EBITDA Margin fell 118% or 1,152 bps month-over-month and 174% or 2,791 bps year-over-year just one month earlier.
The May results came as hospitals saw volumes increase month-over-month, but continue to fall year-over-year and compared to budget. Operating Room Minutes saw the greatest month-over-month increase, jumping 92% compared to the low levels seen in April, as hospitals nationwide resumed non-urgent procedures. Revenue results for the month were poor but improving, with revenues below 2019 levels, but greater than last month. Expenses declined in May relative to the same period last year due to significant actions taken by many organizations to control costs.
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
*Note: The Kaufman Hall Hospital Operating Margin and Operating EBITDA Margin Indices are comprised of the national median of our dataset adjusted for allocations from corporate, physician, and other entities to the hospitals.
EBITDA Margin by Bed Size
Operating EBITDA Margins fell year-over-year and compared to budget for hospitals in five of six bed-size cohorts, ranging from 26 to 500 beds or more. Hospitals with 100-199 beds had the greatest decreases, down 39% year-over-year and 35% below budget, due in part to low volumes and high labor and non-labor expenses. The other four cohorts clustered between margin declines of 3% and 10% year-over-year.
The smallest hospitals were the exception, as the only cohort to see margin increases in May due to rising revenues—primarily driven by CARES funding—and low bad debt and charity care. Operating EBITDA Margin jumped 70% year-over-year and 46% above budget for hospitals with 0-25 beds.
% Change
Absolute Change
©2020 Kaufman, Hall & Associates, LLC
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