Hospitals and doctors see revenue rebound, but spending issues remain

The challenges of the omicron variant have started to fade, but many hospitals and physician groups are still grappling with COVID-19-related expenses.

Hospitals and healthcare systems faced an uphill battle in early 2022 as they struggled to meet the challenges posed by the growing omicron variant; However, new data shows that these organizations are beginning to see relief as outpatient volumes and revenue rebound.

While actual operating margins for hospitals and health systems were negative for a third consecutive month, according to the National Hospital Flash Report and Kaufman Hall’s Physician Flash Report, gross operating income increased 14% from February to March. Total spend per adjusted release decreased 9% and adjusted releases increased 18% month-over-month. Overall, the average length of stay for patients decreased by 6.2% compared to February, as there were fewer patients requiring long hospital stays.

“Hospitals saw a resurgence in outpatient care and revenue in March as many patients sought care that they delayed during the Omicron surge,” said Erik Swanson, senior vice president of data and analytics. analysis at Kaufman Hall, in an e-mail statement. “The drop in COVID-19 case rates also meant that hospitals had fewer high-acuity patients. Although the road to recovery remains long for many hospitals, these trends indicate that some pressures from the pandemic may be lifted.

On the physician side, physicians saw an increase in productivity, compensation and revenue in the first quarter of the year due to an increase in the number of patients, according to reports. For example, physician wRVU per FTE increased by 15% and physician compensation increased by 7% to $349,072. But physicians still face heavy patient expenses due to these increased volumes. Total out-of-pocket spending per FTE physician increased by 12.9% compared to the first quarter of 2020.

“Subsidies and physician spending both hit two-year highs in the first quarter, and both metrics appear to be on an upward trajectory for the foreseeable future,” said Matthew Bates, chief executive and line manager. medical business services at Kaufman Hall, in an email release. “At the same time, productivity and revenue per physician have seen dramatic increases. Physician leaders must continue to closely monitor these trends and identify opportunities for improvement to manage the cost curve in the future.”

Amanda Schiavo is Finance Editor for HealthLeaders.