Kaufman Hall: Hospital Finances Seen Stabilizing Across the Year
Hospitals’ financial and operational performance remained stable in October, with key indicators including revenue, operating margins, and the average length of patient stay generally holding steady, according to the most recent “National Hospital Flash Report” from the Chicago-based consulting and advisory firm Kaufman Hall, a Vizient company.
According to the report, published on Dec. 9 and posted to the firm’s website, the mean operating margin for hospitals in October was 4.4 percent, up slightly from the 4.3 percent mean operating margin in April through September. Indeed, hospital operating margins have been stable all year; in January, the mean operating margin was 4.9; in February, 4.4 percent, and in March, 4.2 percent. All of the 2024 mean operating margins have been considerably higher than in November and December 2023, when they were 2.5 percent and 2.7 percent.
“Hospitals continue to experience overall financial and operational stability. However, supplies and drug expenses continue to put pressure on hospitals, and cost containment should be a priority, said Erik Swanson, senior vice president and Data Analytics Group Leader at Kaufman Hall. “Continued growth in outpatient revenue and reductions in the average length of stay indicate that patient care is shifting to more ambulatory and outpatient care sites,” he said.
Key takeaways from the report:
1. Overall, October data show continued stability. Revenue, average length of stay, and other indicators show stable performance.
2. Outpatient revenue continues to grow. Revenue growth has been steady over the past few years, indicating a shift in how patients seek care.
3. Discharges per calendar day increased compared to the previous month. This has led to a decrease in overall expenses on a volume adjusted basis, though supplies and drug expenses continue to grow.
The report does note, however, that “October’s Consumer Price Index (CPI) unexpectedly rose 0.2 percent month-over-month with year-over-year inflation climbing to 2.6 percent.”
The full report can be accessed here.
