By capacity I mean during flu season we don't run out of hospital beds when people with serious flu complications need them.

By that definition then "not having capacity" means that people who go to the ER have to get turned away based on medical triaging.

Hospitals often have to set up tents in parking lots to deal with flu cases when the influx is much higher than average. We don't provision for peak flu; we provision for something less than the flu average.

Yes, we do. In the typical flu season, everyone who needs a hospital bed can get one. Flu season happens every year, we have planned and prepared for it. We have not prepared for the load that COVID places on our resources.