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Is healthcare returning to normal? Hospitals approach pre-pandemic performance

par John R. Fischer, Senior Reporter | June 29, 2021
Business Affairs
Hospitals and physician groups are seeing performance come close to pre-pandemic levels
Hospitals and physician groups are seeing an uptick in performance that is moving them closer to pre-pandemic levels.

That’s what Kaufman Hall says in two of its latest reports, suggesting a possible end to the negative impact the COVID-19 pandemic has had on healthcare systems over the last year.

“Organizations looking to thrive post-pandemic will need to both embrace cost reduction as a continuous process and pivot their operations to reflect ongoing changes, including increased demand for outpatient care and persistent declines in emergency department visits,” Erik Swanson, senior vice president of data and analytics at Kaufman Hall, told HCB News.

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Hospital findings were documented in the June edition of Kaufman Hall’s National Hospital Flash Report, and findings on physician groups were discussed in its Physician Flash Report.

While still below early 2019 levels, the average operating margin rose 95.2% from January to May 2021 compared to the same time last year without CARES funding (56.6% year-to-date with CARES). Operating margins, however, were still down 20.5% YTD without CARES and 9% with CARES.

Volume also rose, with adjusted discharges up 9.1% YTD between January and May and adjusted patients days up 14.3% from 2020 to 2021. But adjusted discharges were still 7.1% YTD below January to May 2019, and adjusted patient days were down 0.4%. ED visits were flat compared to January to May 2020 but remained significantly below 2019 rates, while operating room minutes rose 28.3% YTD in May and were close to 2019 levels.

Operating revenue without CARES went up 18.6% from 2020 and 5.9% from 2019, and total expense per adjusted discharge was 1.7% below January to May 2020, but up 16.6% above January to May 2019.

Rising patient visits led to increased productivity, revenues and compensation for employed physician groups nationwide in Q1 2021 compared to 2020, according to the latest Physician Flash Report, which drew from data from nearly 100,000 providers in more than 100 specialties.

Physician compensation per FTE was up 1.1% from Q1 2020 performance at $332,187, and net revenue was $575,113 in Q1, up 9.4% from Q1 2020. The median investment/subsidy, however, was $239,502, down 1.9% from Q1 2020. In addition, total direct expense per physician FTE was up 4% over the same period. Clinical and front-office productivity has largely returned to pre-COVID levels, according to the report.

“As practices look to enhance performance to decrease their investment needs, they must be able to distinguish between the direct costs that physician enterprise leaders are accountable for and the allocated costs that system leaders typically take more accountability for,” Matthew Bates, managing director and physician enterprise service line lead at Kaufman Hall, told HCB News. “Ultimately, managing the level of investment for physicians requires thoughtfully balancing productivity, capacity, and volumes.”

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