U.S. Hospitals Work to Stabilize Finances

November 13, 2024

Across the nation, hospitals are continuing their financial progress in 2024, but recovery remains below the pre-pandemic baseline.

Kaufman Hall’s National Hospital Flash Report for September indicates hospitals saw slight decreases in volume and margins, but that their overall performance remained relatively stable.

“Two data points to monitor in the months ahead are inpatient revenue and average lengths of stay,” said Erik Swanson, senior vice president and data and analytics group leader with Kaufman Hall. “Both metrics increased this month, which indicates that hospitals are treating more high-acuity patients. If this continues, organizations will need to contain expenses.” 

Here are the key takeaways from the report:

• Margins:  Monthly operating margin declined slightly to 3.5 percent during September.
• Cost of care:  Year-to-date, total expenses have increased 6 percent, with labor (5%), supplies (8%), and drugs (7%) all increasing in that time.
• Volume:  Hospitals saw operating room minutes per calendar day decline 3 percent month-over- month, while average length of stay increased 3 percent.
• Action steps:  The report notes the importance of long-term capital strategies, including investment in IT and artificial intelligence, and the need for diverse revenue streams (ambulatory surgery centers, specialty pharmacy).
• Notable trends:  Increases in inpatient revenue and average length of stay indicate hospitals are treating more high-acuity patients; this typically means lower volume and higher expenses for hospitals.
  • Year-over-year headline inflation has eased to 2.4 percent but came in slightly higher than expected during September.

The report, which draws on data from more than 1,300 hospitals, is available online.