National Hospital Financial Picture Remains Unchanged During May

July 09, 2024

Hospitals did not see any financial surprises during May, with margins and other key performance indicators showing less volatility from month to month, according to the latest Kaufman Hall National Hospital Flash Report.

The report, released today, also notes that there is a considerable gap in financial performance for hospitals across U.S. communities.

“The widening gap between higher-performing and lower-performing hospitals illustrates the need for longer-term strategic investments. Short-term cuts and crisis management will not make for sustainable change,” said Erik Swanson, senior vice president, data and analytics group leader, Kaufman Hall.

Here's what you need to know:

• Margins:  Kaufman Hall’s Calendar Year to Date Operating Margin Index remained unchanged during May (3.8 percent).
  • Month-over-month, national hospital margins declined from 4.2 percent in April to 3.7 in May.
• Revenue:  Hospitals saw slight declines month over month in inpatient (-2%) and outpatient revenue (-1%) per calendar day. Comparing year-to-date performance, inpatient and outpatient revenue were up 7 percent and 10 percent, respectively.
• Expenses:  Year-to-date, hospital expenses per calendar day for labor (4%), supplies (10%), and drugs (10%) all increased during through May.
• Action steps:  The report notes the need for health systems to differentiate themselves from their competitors; execute realistic goals; analyze every aspect of their current operations during the strategic planning process; and consider if they have the necessary resources to meet their goal, the report notes.
• Quotable:  “Hospitals should seize this relative moment of calm to focus on enterprise strategic planning in order to achieve long-term success,” Swanson said.

The report includes a representative sample of more than 1,300 hospitals and is available online.

HAP is focused on policies and initiatives that bolster the financial sustainability of Pennsylvania hospitals. Last month, a report from the Pennsylvania Health Care Cost Containment Council (PHC4) illustrated our need to support hospitals. More than half of Pennsylvania’s general acute care hospitals operated at a loss during fiscal year (FY) 2023 and only a third had at least the minimum margin needed to be sustainable in the long term. Read the PHC4 report online.