Hospitals Continue Efforts for Financial Sustainability

January 16, 2024

Hospitals saw some encouraging financial trends toward the end of the year as they work to find a sustainable path heading into 2024.   

Released this month, the latest Kaufman Hall National Hospital Flash Report indicates hospitals are showing signs of recovery from the long-term strain of the pandemic, but the “gap between high and low performers remains quite wide.”

“Revenue per adjusted discharge has increased while total expense per adjusted discharge has decreased month-over-month and year-over-year—a sign of financial recovery,” the report notes. “This reflects the efforts organizations have taken to deliver care in the most effective settings and reduce reliance on contract labor where possible.”

Here’s what you need to know:

• Margins:  Kaufman Hall's year-to-date hospital operating margin index rose from 1.5 percent in October to 2 percent during November. Monthly operating margin rose from 3.2 percent to 3.8 percent from October to November.
• Revenue:  Year-over-year, inpatient and outpatient revenue increased 5 percent and 9 percent, respectively. Net operating revenue per calendar day increased 6 percent.
• Expenses:  Despite increases for drugs, supplies, and other non-labor costs, total expense per adjusted discharge declined 2 percent year-over-year.
• Volumes:  While operating room minutes increased 4 percent year-over-year, average length of stay and emergency department visits per calendar day both declined 6 percent.
• Key takeaway:  “Organizations that have adopted value-based and bundled payment models will benefit further as they transition and provide care at the appropriate clinical setting,” the report notes.

The latest flash report analyzes data from more than 1,300 hospitals and is available online.