High expenses continue to hurt overall results
The median year-to-date operating margin index for hospitals increased to 0% in April, up from -0.3% in March, leaving hospitals with little financial flexibility in a changing economics environment.
Hospitals saw increases in bad debt and charity care in April. Combined with decreased patient volumes, Kaufman Hall experts say these data could illustrate the effects of the start of widespread disenrollment from Medicaid following the end of the public health emergency and the continuous enrollment provision that accompanied it. The report notes that as states continue the process of redetermination, these trends will likely continue.
“With states conducting their Medicaid eligibility redetermination, it’s predicted that hundreds of thousands of people will ultimately become uninsured,” said Erik Swanson, senior vice president of Data and Analytics with Kaufman Hall, in a statement. “The data indicate that we may already be seeing the effects of disenrollment materialize with patients less likely to seek out the care they need and a continued rise in bad debt and charity care.”
Inflation has also added to the challenges facing hospitals post-pandemic.Labor expense per adjusted discharge increased 3% in April from March, and the costs of goods and services continued to be well above pre-pandemic levels. While total expenses fell slightly in April, operating revenues declined at a faster rate, down 5% month-over-month, according to the report.
“Hospital and health system leaders must figure out how to navigate the new financial reality and begin to take action,” said Swanson. “In the face of operating margins that may never fully recover and inflated expenses, developing and executing a strategic path forward to a future that is financially sustainable is crucial.”
The National Hospital Flash Report draws on data from more than 900 hospitals from Syntellis Performance Solutions.