Hospital finances have been improving moderately, the Chicago-based Kaufman Hall consulting firm was able to report on June 27. According to a press release published on Tuesday, “ Hospital finances showed signs of stabilizing in May, amid slightly improving operating margins, declining expenses and notable increases in outpatient visits, according to the latest National Hospital Flash Report” from the consulting firm.
Kaufman Hall leaders noted on Wednesday that “The median year-to-date (YTD) operating margin index for hospitals was 0.3 percent in May, up slightly compared to 0.1 percent in April and March. Although operating margins are slowly regaining positive territory, they are well below levels during the latter half of 2021 and prior to the pandemic. Adjusted discharges per calendar day, emergency department visits per calendar day and operating room minutes per calendar day each increased between April and May 2023 and between May 2022 to May 2023 respectively,” the firm added.
“Hospitals may no longer be experiencing the post-pandemic effect of pent-up demand for inpatient services, but patients are showing us they are becoming more comfortable with receiving care in this setting,” said Erik Swanson, senior vice president of Data and Analytics with Kaufman Hall. “Hospitals can expect a ‘new normal’ of slowly increasing margins that may never return to pre-pandemic levels without reevaluating how and where care is being delivered.”
There was good news on the outpatient front, in the latest report: “Net operating revenue per calendar day was 9 percent higher in May 2023 compared to May 2022, while outpatient revenue per calendar day rose 14 percent over the same time frame.”
“Now that hospital finances are showing signs of stabilization, it’s an opportune time for executives to reevaluate their longer-term business strategy,” said Swanson. “The continuing shift in patient demand from inpatient to outpatient services is particularly important and will inform business decisions for years to come.”
The report’s “Key Takeaways” are as follows:
1. Hospitals’ operating margins moved back into positive territory in May. However, operating margins continue to stand well below historical norms.
2. People are becoming more comfortable with inpatient care. Discharges, emergency department visits and operating room minutes all climbed, although very modestly on a year-to-date basis.
3. There is a sizeable and growing gap between primary hospital revenue sources. Revenue from outpatient care is increasing at a much greater rate than revenue from inpatient care.
4. Labor expenses are beginning to decline. While labor costs remain significant, expenses in May were well below comparable levels from May 2022.
The National Hospital Flash Report draws on data from more than 1,300 hospitals from Syntellis Performance Solutions. The full report can be accessed here.
