The Kaufman Hall median hospital operating margin index was -1.6% for January through October, not including federal funding from the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). With the funding, the median margin was 2.4%. Operating margin dropped from 75% to 69.4% compared with the same period last year, and from 10.6% to 9.2% year-over-year without CARES Act funding. With the federal aid, the operating margin fell from 20.4% to 18.7% year-to-date and from 9.7% to 8.5% below October 2019 levels.
Gross operating revenue (not including CARES Act funding) dropped 4.8% from January to October compared with the same period in 2019, but it was flat compared with October 2019. Fewer outpatient visits were a major contributor. Furthermore, expenses rose as hospitals continue to bring back furloughed workers, purchase drugs, buy personal protective equipment, and procure other supplies needed to care for patients with COVID-19.
Expenses will continue to mount related to COVID-19, while operating margins and revenues are predicted to continue as they have. Rising COVID-19 rates mean patients delay nonurgent procedures and outpatient care, Kaufman Hall said.
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