May 2019
Profitability
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EBITDA Margin by Region ?
Looking at Operating EBITDA Margin performance year over year, the Midwest improved profitability at more than twice the rate of other areas of the country. Despite soft inpatient volumes, this region had strong revenue gains and reduced both labor and non-labor expenses.
Both the Northeast/Mid-Atlantic and Great Plains regions had minor year-over-year profitability declines in April. This represents a several-months long trend of unfavorable year-over-year performance in the Great Plains. The Great Plains experienced a nearly 8 percent decline in revenue, but only a 3 percent reduction in total expenses.
% Change
Absolute Change
% Change
Absolute Change
National Profitability Observations
Hospital profitability made strong gains in April compared to the same period last year, with Operating Margins up more than 20 percent (162.6 bps) and Operating EBITDA Margin up more than 8 percent (155.6 bps). Increases in patient volumes and decreases in lengths of stay contributed to the strong performance, resulting in slight increases in patient revenue. Interestingly, this performance was not anticipated, as Operating Margins were nearly 6 percent above budget. This is worth monitoring going forward, as extended periods of performance favorable to budget could have unintended effects on an organization’s decision making around operational controls and capital planning.
While year-over-year performance was strong, Operating Margins were down 2.4 percent (19.3 bps) in April compared to the previous month. Contributing factors include softer inpatient and Emergency Department (ED) volumes. Increases in non-labor expenses—particularly drugs and supplies—also put pressures on monthly profitability.
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
1.8%
(0.1%)
8.6%
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Operating Margin
5.9%
(2.4%)
20.4%
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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
29.2
(2.0)
155.6
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Operating Margin
54.6
(19.3)
162.6
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By Region
National Observations
By Bed Size
EBITDA Margin by Bed Size
For the first time in several months, the nation’s largest hospitals (500 beds or more) experienced profitability increases. Of particular note is the strong productivity management, with Full-Time Equivalents per Adjusted Occupied Bed (FTEs per AOB) for this cohort declining nearly 3 percent year over year. Continuing this performance would help end the trend of profitability challenges at these large organizations.
Hospitals with 100-199 beds experienced profitability gains for the fifth consecutive month. These organizations recognized revenue gains, while keeping expenses under control. The 300-499 bed-size cohort experienced profitability declines in April, with Operating EBITDA Margin down more than 50 bps compared to the same period last year. Despite increased volumes, hospitals of this size experienced stagnate revenue and increased non-labor expenses.
% Change
Absolute Change
% Change
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By Region
National Observations
By Bed Size
©2019 Kaufman, Hall & Associates, LLC
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