December 2018
Profitability
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EBITDA Margin by Region ?
All regions of the U.S. experienced year-over-year increases in EBITDA margin. For the fourth consecutive month, the Midwest region experienced the greatest profitability gains, with a 400 bps year-over-year increase. This solid performance is driven by revenue growing faster than expenses. The profitability of hospitals out-performed budget in all geographies, with the exception of the Northeast/Mid-Atlantic. This area of the country continues to underperform compared to other regions.
% Change
Absolute Change
% Change
Absolute Change
National Profitability Observations
This month marks the second month in the past three where profitability has declined. Operating EBITDA margin declined 54 basis points (bps) and Operating Margin declined 83 bps. This performance is being driven, in part, by declining volumes and utilization, increasing lengths of stay, and increasing expenses—particularly for supplies and purchased services. This recent month-to-month “sawtooth” performance may indicate instability in the sector. The recent federal ruling challenging the constitutionality of the Affordable Care Act (ACA) may further exacerbate this instability.
Unless noted, figures are actuals and medians expressed as percentage change
Budget Variance
Month Over Month
Year Over Year
Year Over Year Distributions
(Click to enlarge)
Operating EBITDA Margin
4.7%
(3.9%)
13.6%
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Operating Margin
(1.7%)
(9.5%)
19.8%
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Unless noted, figures are actuals and medians expressed in basis points
Profitability % Change
Profitability Absolute Change
Budget Variance
Month Over Month
Year Over Year
Year Over Year Distributions
(Click to enlarge)
Operating EBITDA Margin
68.0
(54.0)
159.0
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Operating Margin
3.5
(83.0)
126.5
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By Region
National Observations
By Bed Size
EBITDA Margin by Bed Size
Hospitals with more than 500 beds have underperformed in profitability for the past five consecutive months. This month, these large institutions experienced year-over-year profitability declines of more than 200 bps. Adjusted discharges for the same group declined 7 percent, while expenses per adjusted discharge rose nearly 2 percent. This data suggests that large hospitals have a greater percentage of fixed expenses that do not fluctuate with volume, compared to smaller organizations. Conversely, hospitals with less than 500 beds all reported year-over-year improvements in profitability. Hospitals in the 0-25 bed, 26-99 bed, and 100-199 bed ranges also outperformed their budgeted performance.
% Change
Absolute Change
% Change
Absolute Change
By Region
National Observations
By Bed Size
©2018 Kaufman, Hall & Associates, LLC
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