Hospital finances break even in April, Kaufman Hall data shows
High expenses have been placing added strain on hospitals as they try to recover from the challenges of the pandemic.
Photo: Emir Memedovski/Getty Images
Hospital finances broke even in April amid a continuing trend of high expenses, plus the unwinding of the Medicaid continuous coverage requirement of the COVID-19 public health emergency, according to the latest National Hospital Flash Report from Kaufman Hall.
The median year-to-date operating margin index for hospitals was 0.0% in April, up slightly compared to -0.3% in March. With operating margins remaining at or below zero, hospitals have been left with little financial flexibility, the report found.
WHAT'S THE IMPACT
Hospitals experienced increases in bad debt and charity care in April. Combined with decreased patient volumes, authors said the data could illustrate the effects of the start of widespread disenrollment from Medicaid following the end of the PHE and the continuous enrollment provision that accompanied it.
As states continue the process of redetermination, these trends will likely continue, according to Erik Swanson, senior vice president of Data and Analytics with Kaufman Hall.
"With states conducting their Medicaid eligibility redetermination, it's predicted that hundreds of thousands of people will ultimately become uninsured," said Swanson. "The data indicate that we may already be seeing the effects of disenrollment materialize with patients less likely to seek out the care they need and a continued rise in bad debt and charity care."
Meanwhile, high expenses have been placing added strain on hospitals as they try to recover from the challenges of the pandemic. Labor expense per adjusted discharge increased 3% in April from March, and the costs of goods and services continued to be well above pre-pandemic levels. While total expenses fell slightly in April, operating revenues declined at a faster rate, down 5% month-over-month.
"Hospital and health system leaders must figure out how to navigate the new financial reality and begin to take action," said Swanson. "In the face of operating margins that may never fully recover and inflated expenses, developing and executing a strategic path forward to a future that is financially sustainable is crucial."
THE LARGER TREND
As Swanson mentioned, states kept people continuously enrolled in Medicaid during the COVID-19 pandemic in exchange for enhanced federal funding, but continuous enrollment ended on March 31, and over the coming months states will redetermine eligibility for enrollees and disenroll those who are no longer eligible.
And according to a new survey, most Medicaid enrollees are unaware of this process.
The KFF survey released last week shows about two-thirds (65%) of all Medicaid enrollees say they are "not sure" if states are now allowed to remove people from Medicaid if they no longer meet the eligibility requirements or don't complete the renewal process, with an additional 7% incorrectly saying states will not be allowed to do this.
Part of the confusion may stem from the fact that almost half of enrollees said they've never been through the Medicaid renewal process before. That includes two-thirds (68%) of Medicaid enrollees who are 65 and older and more than half of Medicaid enrollees who are between the ages of 18 and 29 (53%).
Twitter: @JELagasse
Email the writer: Jeff.Lagasse@himssmedia.com
