Hospital financials show signs of stabilizing

Hospital financial performance across the nation has shown signs of stabilization in 2023 compared to the previous year, according to the latest National Hospital Flash Report released by Kaufman Hall. The report provides a comprehensive overview of the current financial landscape in the healthcare industry.

The median calendar year-to-date operating margin index for hospitals reached 1.1% in August, showing an increase from 0.9% in July. While these margins are still below historical levels, the data indicates that positive margins are becoming more frequent throughout 2023.

Hospitals have faced the challenges of rising expenses in the face of inflationary pressures. However, the August report revealed that hospitals managed to offset elevated supply and drug expenses with increased revenue. Labor expenses also decreased on a volume-adjusted basis, reflecting reduced dependence on contract labor and a more overall financial stabilization.

Another positive trend noted in the report is the continued decline in average lengths of stay, down 4% month-over-month in August. This decrease suggests that patients are returning to more normal patterns of accessing care.

Erik Swanson, senior vice president of Data and Analytics at Kaufman Hall, emphasized the importance of this period of relative stability for hospitals. Swanson said in a statement: “This period of relative stabilization is the time for hospitals to re-engage in capital planning efforts. Hospitals may be feeling reluctant given the last few years, but those that wait may find themselves falling behind their competitors and missing out on key opportunities."

The August data from the report also highlighted a continued emphasis on care transitioning to the outpatient setting. Outpatient revenue and inpatient revenue per calendar day increased by 12% and 4%, respectively, on a month-over-month basis. This shift underscores the evolving nature of health care delivery and patient preferences.

The National Hospital Flash Report is based on data collected from more than 1,300 hospitals, drawing on insights from Syntellis Performance Solutions.