Meanwhile, hospitals continued to see expenses mount as they bore the high costs of caring for high acuity patients, including COVID-19 cases. Total Expense per Adjusted Discharge and Labor Expense per Adjusted Discharge both increased 14.4 percent throughout 2020, and Non-Labor Expense per Adjusted Discharge was up 14.2 percent.
“The remaining winter months will be critically challenging for our hospitals and health systems as COVID-19 hospitalizations climb and new, more contagious variants of the virus spread nationwide,” said Jim Blake, a managing director at Kaufman Hall and publisher of the National Hospital Flash Report. “COVID-19 will continue to create a volatile environment well into 2021.”
Hospitals and health systems also have been affected by year-over-year declines in volumes and revenues to physician practices, the Physician Flash Report found. Physician productivity—measured as Physician work Relative Value Units (wRVUs) per Full-Time Equivalent (FTE)—was 4.9 percent below 2019 levels in October, due to fewer patient visits and lower hospital diagnostic and procedural volumes compared to pre-pandemic levels.
New patient visits, which are key to growing physician practices, also declined year-over-year. Contributing factors include negative economic trends, competitive telemedicine offerings, and continued reluctance of some patients to visit physician offices. The lower productivity drove Net Revenue per Physician FTE down 4.5 percent year-over-year compared to 2019.
“The increasing size of employed physician groups and the level of investment needed to support them continue to strain health system operating margins,” said Cynthia Arnold, senior vice president at Kaufman Hall. “While inpatient care and procedures offset those subsidies somewhat, long-term success will require joint system-physician leadership representation and robust data and analytics to address physician productivity issues.”
The National Hospital Flash Report draws on data from more than 900 hospitals.
The new Physician Flash Report includes national data from Axiom’s Comparative Analytics from Syntellis Performance Solutions, which contains data on nearly 100,000 providers representing more than 100 specialties.
About Kaufman Hall
Kaufman Hall provides management consulting solutions to help society’s foundational institutions realize sustained success amid changing market conditions. Since 1985, Kaufman Hall has been a trusted advisor to boards and executive management teams, helping them incorporate proven methods, rigorous analytics and industry-leading solutions into their strategic planning and financial management processes, with a focus on achieving their most challenging goals.
Kaufman Hall services use a rigorous, disciplined, and structured approach that is based on the principles of corporate finance. The breadth and integration of Kaufman Hall advisory services are unparalleled, encompassing strategy; financial and capital planning; cost transformation; treasury and capital markets management; and mergers, acquisitions, partnerships, and joint ventures.
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