March 2020
Margin
EBITDA Margin by Region *
Operating EBITDA Margin was down year over year across all regions, and below budget for four of five regions. The Northeast/Mid-Atlantic saw the biggest year-over-year drop at -20.3 percent, and was -14.3 percent to budget, due to lower-than-expected volumes and increasing overall expenses—including high labor expenses in particular.
The South experienced the least year-over-year drop in Operating EBITDA Margin at -3.6 percent, and fell -5.2 percent below budget. The Great Plains had the biggest variance to budget at -21.0 percent, and was down -12.6 percent year over year, due in part to a significant increase in bad debt and charity care.
The West was down -7.7 percent year over year, but was the only region to fall slightly above budget expectations for Operating EBITDA Margin at 1.1 percent. The Midwest was down -4.6 percent year over year, following two consecutive months of having the highest year-over-year increases in Operating EBITDA Margin compared to other regions.
% Change
Absolute Change
National Margin Observations
The nation’s hospitals experienced margin declines in February, following moderate declines in January. For many organizations, it was the last month of business as usual before coming face-to-face with the impacts of unprecedented demands as COVID-19 cases mount nationwide. Operating Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) Margin fell -10.3 percent year over year in February, or -92.7 basis points (bps), and was -10.2 percent or -105.2 bps below budget expectations. Operating Margin was down -11.7 percent or -73.2 bps year over year, and -11.9 percent or -92.4 bps below budget. Looking at month over month results, Operating EBITDA Margin was down -14.7 percent or -162.9 bps, and Operating Margin was down -24.6 percent or -206.4 bps.
Lower volumes compared to January 2020 and higher expenses across most metrics contributed to the decreasing margins, despite moderate revenue increases both month over month and year over year. The COVID-19 pandemic will dramatically change the picture across all metrics in the coming months.
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
(10.2%)
(14.7%)
(10.3%)
operating_ebitda_margin.svg
Operating Margin
(11.9%)
(24.6%)
(11.7%)
operating_margin.svg
Unless noted, figures are actuals and medians expressed in basis points
Margin % Change
Margin Absolute Change
Budget Variance
Month Over Month
Year Over Year
Year Over Year Distributions
(Click to enlarge)
Operating EBITDA Margin
(105.2)
(162.9)
(92.7)
operating_ebitda_margin_abs.svg
Operating Margin
(92.4)
(206.4)
(73.2)
operating_margin_abs.svg
EBITDA Margin by Bed Size
Margin results were down year over year across all bed-size cohorts, and below budget for five of six cohorts. Mid-sized hospitals of 100-199 beds saw the biggest decreases, down -16.4 percent and -17.6 percent to budget, due to lower-than-expected volumes and high overall expenses.
The nation’s largest hospitals of 500 beds or more saw the least decrease at -2.4 percent, and -5.9 percent to budget. Hospitals of 0-25 beds fell -14.7 percent year over year, but was the only cohort to perform above budget expectations at 4.3 percent. The year-over-year decline in Operating EBITDA Margin comes after exceptionally strong performance for the nation’s smallest hospitals in January, when the cohort jumped 24.6 percent year over year, and performed 21.6 percent above budget.
% Change
Absolute Change
©2020 Kaufman, Hall & Associates, LLC
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