...year-over-year still short of pre-pandemic levels.
Hospital operating margins continue to grow and stabilize, although the gap between high- and low-performing hospitals remains wide, a new report shows.
The median calendar year-to-date operating margin index for hospitals in November was 2%, reflecting an ongoing improvement. However, the margins have yet to return to levels seen in pre-pandemic 2020 and 2021, according to Kauffman Hall’s latest National Hospital Flash Report.
Year-over-year inpatient and outpatient revenues for November 2023 increased by 5% and 9%, respectively, total expense adjusted discharges fell, and revenue per adjusted discharge grew—all indicators of financial recovery, according to the KH report, which relies on data from more than 1,300 hospitals.
These favorable trends reflect the efforts that hospitals have taken to deliver care in the most effective settings and reduce reliance on contract labor when possible.
Erik Swanson, senior vice president of Data and Analytics with Kaufman Hall says "hospitals should take advantage of the relative stability and re-embrace strategic growth if they hope to see continued success in 2024."
"Growth strategies may vary from hospital to hospital, but all leaders should ensure that they are supporting goals beyond just profitability and scale, including business model transformation and diversification," he says.
In addition, average length of stay fell indicating a shift towards more normal patient acuity. Swanson says that hospitals that have adopted value-based and bundled payment models will benefit further as they transition and provide care at the appropriate clinical setting.
“Hospitals should take advantage of the relative stability and re-embrace strategic growth if they hope to see continued success in 2024.”
Erik Swanson, Kaufman Hall
John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.
KEY TAKEAWAYS
The median calendar year-to-date operating margin index for hospitals in November was 2%, reflecting an ongoing improvement.
However, the margins have yet to return to levels seen in pre-pandemic 2020 and 2021, according to Kauffman Hall.
Year-over-year inpatient and outpatient revenues for November 2023 increased by 5% and 9%, respectively, while total expense adjusted discharges fell.
Revenue per adjusted discharge grew—all indicators of financial recovery, according to the KH report, which relies on data from more than 1,300 hospitals.
These favorable trends reflect the efforts that hospitals have taken to deliver care in the most effective settings and reduce reliance on contract labor when possible.