More Financial Uncertainty for Hospitals

August 08, 2024

U.S. hospitals continue to face an uncertain financial picture, as they work toward sustainability and ensuring access to care.

The latest Kaufman Hall National Hospital Flash Report indicates operating margins are starting to improve, but there is a large spread across hospital facilities.

“There is a growing divide between higher and lower performing hospitals, even as overall market conditions continue to stabilize,” said Erik Swanson, senior vice president and data and analytics group leader with Kaufman Hall.

Here’s what you need to know:

• Margins:  Hospitals’ calendar-year-to-date operating margin was 4.1 percent through June. The monthly operating margin average was 3.9 percent for June.
• Revenue:  Year-to-date, hospitals saw inpatient and outpatient revenue per calendar day increase 7 percent and 8 percent respectively.
  •  Compared to May, hospitals saw downtrends for both inpatient revenue (-2%) and outpatient revenue (-4%) during June.
• Expenses:  Year-to-date, labor expenses per calendar day (4%), supply expenses (8%), and drug expenses (8%) are all up significantly compared to 2023.
• Volume:  Year-to-date, emergency department visits (3%) and operating room minutes per calendar day (1%) were both up from 2023.
• Quotable:  ““Smaller hospitals continue to face challenges related to size and access to capital,” Swanson said.

The report notes the need for hospitals to closely monitor their real estate portfolio and future growth needs as part of their focus on financial and operational goals. The report, which is based on a sample of 1,300 hospitals, is available online.