September 2020
EBITDA Margin by Region *
With CARES relief, hospitals in three of five regions saw Operating EBITDA Margin fall year-over-year in August. Hospitals in the Northeast/Mid-Atlantic saw the greatest year-over-year decline at 16%, but still performed 13% above budget expectations. The losses came as the region experienced significant volume declines in August across nearly all metrics, including an 18% year-over-year drop in ED Visits.
The Midwest was down 10% both year-over-year and compared to budget, while the West was down 6% year-over-year and up just 1% to budget. Hospitals in the South saw a slight year-over-year increase at 3%, and were essentially in line with budget for the month.
The Great Plains was an outlier, with Operating EBITDA Margin jumping 48% year-over-year and 46% above budget. The increase likely came as the result of an infusion of CARES relief, and lower drug and purchased service expenses relative to other regions. The Great Plains also was the only region to experience a year-over-year increase in Adjusted Patient Days in August.
Without CARES funding, three regions saw year-over-year margin decreases while two regions saw year-over-year increases. Hospitals in the Northeast/Mid-Atlantic had the greatest year-over-year declines, with Operating EBITDA Margin down 44% year-over-year but 2% above budget. Hospitals in the Midwest had the greatest decrease to budget at 27% and were down 28% year-over-year. Hospitals in the West were down 14% year-over-year and 7% below budget.
The South was up just 1% year-over-year but 4% below budget, while the Great Plains was up 10% year-over-year and 12% above budget without the federal funding.
% Change
Absolute Change
National Margin Observations
Hospitals across the country saw margin performance take a step back in August, dipping both month-over-month and year-over-year. While margin results have consistently fallen below 2019 levels, the August declines follow three months of initial progress after devastating losses in March and April. The latest results illustrate the long road ahead for hospitals as they weather the ups and downs of a difficult recovery as the COVID-19 pandemic continues.
Operating Margin is down 7.9 percentage points since the start of the year compared to the same period last year, not including federal funding from the Coronavirus Aid, Relief, and Economic Security (CARES) Act. With the funding, Operating Margin is down 2.3 percentage points year-to-date. On a percent change basis, Operating Margin is down 89% year-to-date without CARES funding and 22% year-to-date with the funding.
Without CARES relief, Operating Margin dropped 1.8 percentage points or 18% year-over-year, 1.2 percentage points or 12% month-over-month, and 0.7 percentage point or 8% below budget in August. Operating Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) Margin was down 2.1 percentage points or 14% year-over-year, 1.1 percentage points or 7% month-over-month, and 0.8 percentage point or 7% below budget.

Hospitals still saw declines in August even with CARES funding. Factoring in the federal aid, Operating Margin was down 0.4 percentage point or 3% year-over-year and 2.9 percentage points or 28% month-over-month, but 0.4 percentage point or 3% above budget for the month. Operating EBITDA Margin fell 0.4 percentage point or 2% year-over-year and 2.7 percentage points or 19% month-over-month, but was 0.2 percentage point or 1% above budget expectations.
Multiple factors contributed to the August declines, including continued low volumes and revenues, and high per-patient expenses. Adjusted Discharges are down 13% since the start of the year compared to the same period in 2019. Emergency Department Visits and Operating Room Minutes have been particularly affected by the pandemic, dropping 16% and 14% year-to-date, respectively.
Fewer outpatient visits have hit revenues, with Outpatient Revenue down 10% year-to-date compared to January-August 2019. Inpatient Revenue has fallen 4% over the same period. Meanwhile, per-patient expenses continue to rise as hospitals struggle to control costs relative to lower patient volumes. Total Expense per Adjusted Discharge has jumped 17% since the start of the year over 2019 levels for January-August.
Margin % Change
Budget Variance
Month Over Month
Year Over Year
Year Over Year Distributions
(Click to enlarge)
Operating EBITDA Margin Less CARES
Operating Margin Less CARES
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
Operating Margin Less CARES
Unless noted, figures are actuals and medians expressed in basis points
EBITDA Margin by Bed Size
Looking at hospitals by size, Operating EBITDA Margin fell year-over-year in four of six bed-size cohorts. Hospitals with 300-499 beds were down 10% year-over-year and 6% below budget, while those with 500 beds or more were down 9% year-over-year and 10% below budget.
Hospitals with 100-199 beds also were down year-over-year and below budget, while those with 26-99 beds were down year-over-year but above budget. Hospitals with 200-299 and 0-25 beds were up both year-over-year and compared to budget.
The smallest hospitals (0-25 beds) were an outlier with Operating EBITDA Margin jumping 18% year-over-year and 49% above budget, due to federal CARES funding and lower expenses relative to larger hospitals.
Without CARES funding, hospitals in five of six bed-size cohorts saw year-over-year declines in Operating EBITDA Margin in August. Hospitals with 300-499 beds saw the greatest decrease, down 35% year-over-year and 13% below budget due to low volumes and high per-patient expenses. Hospitals with 500 beds or more saw the greatest budget decrease at 17% and were down 21% year-over-year.
Smaller hospitals with 26-99 beds were down 11% year-over-year but slightly above budget, while hospitals with 0-25 beds were up 4% year-over-year and 12% above budget without the federal aid.
% Change
Absolute Change
©2020 Kaufman, Hall & Associates, LLC
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