Top 5 Healthcare Finance KPIs: September 2020

November 12, 2020

September 2020 measured the best full-month revenue performance since the pandemic began, but this bit of good news isn’t enough to indicate a turnaround in hospital finances overall. Key Performance Indicators (KPIs) again showed decreasing margins, decreasing volumes, and increasing expenses compared to 2019. September 2020 hospital margins overall improved compared to August, but the gains were again offset by increased expenses.

Here are the September 2020 financial KPIs for U.S. hospitals and health systems:

#1 — Despite some improvement, Operating Margins remain lower than in 2019

September 2020 Operating Margin was -1.9% without CARES relief and +2.7% with CARES. For comparison, hospital Operating Margin was +3.1% in September 2019, according to the Kaufman Hall Operating Margin Index.

#2 — Length of Stay and Net Patient Service Revenue increased

Length of Stay rose about 2.3% YOY and year to date (YTD). This rise contributed to an increase in payment per case with Net Patient Service Revenue (NPSR) per Adjusted Discharge up 10.7% YOY and NPSR per Adjusted Patient Day up 9.4% YOY.

#3 — Discharges decreased

Discharges were down 5.6% YOY and 9.9% YTD.

#4 — Non-Labor Expenses increased

Total Non-Labor Expense increased 5.1% YOY and Non-Labor Expense per Adjusted Discharge rose 14.4%.

#5 — Total Labor Expense also increased

Total Labor Expense increased 1.2% YOY and Full-Time Equivalents (FTEs) per Adjusted Occupied Bed (AOB) rose 0.9% YOY as many hospitals began to bring back furloughed workers.

Monthly spotlight: Customers Reluctant to Receive In-Person Care

Operating Room Minutes showed some recovery, rising 3.6% YOY as hospitals continued to push through case backlogs. But overall, Operating Room Minutes remained down 12% YTD, due to COVID-related delays or cancellations of care. Consumers continued to avoid emergency departments, with Emergency Department Visits falling 19.1% YOY and 16.4% YTD in September.

Hospitals face ongoing challenges as they continue to perform well below last year. Earlier issues of the National Hospital Flash Report noted that postponements or cancellations in care were primarily due to consumer behavior rather than social distancing mandates. Looking ahead, consumers may remain aloof as rising COVID-19 cases collide with the seasonal flu. The results could prove detrimental to public health and to hospitals’ financial well-being.

Turning Data Into Action: Adding Content to Drive Real-Time Operational Decisions

Deeper data analysis suggests that the pandemic’s impacts and recovery are highly variable for hospitals of different sizes and across different regions, with some weathering the storm better than others. Organizations must prepare to repay Medicare Accelerated Payments and any paycheck protection funding used, which will further increase balance sheet pressure. If combined with greater volume downturns, the repercussions could be significant.

Our nation’s hospitals continue to rise above the many challenges they face to care for their communities, but doing so is easier when hospitals understand their performance in the context of the broader market. Axiom™ Comparative Analytics helps hospitals and health systems drive real-time operational decisions and performance improvement initiatives by providing performance insights, helping healthcare leaders objectively compare their organization to regional peers, and identifying opportunities to reduce costs and maximize revenue. With easy access dashboards that spotlight specific areas for cost reductions based on your budget and your peers, you can dive deeper into KPIs backed by the market context to ensure a healthy bottom line.

Source: Kaufman Hall’s National Hospital Flash Report, which uses actual data sampled from over 900 hospitals and aggregated using Syntellis' Axiom™ Comparative Analytics. In addition to this snapshot of national results, Comparative Analytics provides the data and comparisons specific to your organization for visibility into how your market is evolving.