Kaufman Hall: Hospital Finances Have Stabilized Amid Rising Expenses

The good news is that U.S. hospital organizations are doing relatively well in the first quarter of the year, as rising patient volume has helped to offset the impact of rising operational costs, according to leaders at the Chicago-based consulting and advisory firm Kaufman Hall, a Vizient company.

In January of this year, according to data released by Kaufman Hall on March 17 in its “National Hospital Flash Report,” average monthly operating margins for U.S. hospitals were 4.4 percent, up from 3.7 percent in December, and considerably above the 0.5 percent in November of last year. Indeed, throughout 2024, the average monthly operating margin hovered between 1.3 percent and 1.8 percent consistently, except in April, when it reached 2.0 percent, and in December, when it hit 2.1 percent.

Per the stabilized numbers, Erik Swanson, managing director and group leader of dataand analytics at Kaufman Hall, said in a statement contained in Monday’s press release, that “January was a relatively stable month for hospitals, as more people received care due in part to seasonal challenges like flu and other respiratory diseases. Hospitals are also experiencing more rapid revenue growth from inpatient than outpatient services. Expenses are also rising, driven primarily by drug costs, though the rate of cost growth has slowed.”

The report, which can be accessed here, offered the following “Key Takeaways”;

Ø   Hospital performance remains stable at the start of 2025. This is due to a confluence of greater service volume and rising expenses.

Ø  Expenses continue to be driven primarily by the cost of drugs. However, the rate of cost growth has slowed considerably.

Ø  Inpatient revenue grew more quickly than outpatient revenue in January. More patients were treated in the hospital and emergency room.