KHA Perspective

September 2018

Kaufman Hall Perspective

Kaufman Hall Perspective

Profitability performance was solid again in August, with a 103 bps month-over-month improvement in Earnings Before Interest, Depreciation, Taxes and Amortization (EBITDA) and a 106 bps improvement in Operating Margin. This strong performance appears to be unsustainable, however, as hospitals face mounting pressures to reduce operational expenses. These pressures will continue without incremental and new revenue sources.

Hospital volumes continued to shift from inpatient to outpatient, with a 3 percent year-over-year decline in inpatient discharges and a 1 percent increase in adjusted discharges. However, both inpatient and adjusted discharges increased relative to the month prior at 6 percent and 2 percent growth, respectively.

Revenue impacts differed across the country. Hospitals in the Northeast/Mid-Atlantic were 10 percent ahead of prior year and 3 percent favorable to budget for NPSR per Admission. This same cohort also saw minimal increases in bad debt and charity. Hospitals with 99 beds and below were most unfavorable to both budget and year-over-year changes, potentially due to decreased government funding.

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