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Hospital financial performance remained relatively stable during the month of August, and despite higher patient volume, revenue and expenses declined on a volume-adjusted basis.

With 27 announced transactions, Q3 had the highest level of activity thus far in 2024. Total transacted revenue of more than $13 billion was the highest Q3 total in the last eight years.

Hospital financial performance remains strong this year, with continued stabilization in the month of July. Outpatient revenue and average lengths of stay showed signs of improvement.

The latest Kaufman Hall National Hospital Flash Report shows that the Calendar Year to Date Operating Margin Index for hospitals was 4.1% in June.

Health systems are confronting a new normal of shrinking revenue and rising labor costs. In the second quarter of 2024, increased labor expenses accounted for 83.9% of total expenses. Additionally, the median investment/subsidy per provider rose 3% since Q2 2023.

As healthcare market conditions continue to stabilize after several years of pandemic-era volatility, many hospital and health system leaders are revisiting their organizations’ strategic options for long-term sustainability.

The latest Kaufman Hall Report includes an inside look at resetting organizational enterprise strategy.

Hospital financial performance remained relatively unchanged during the month of May, and the rate of change slowed for margins and other key performance indicators, which reflects stabilization.

M&A activity in Q2 2024 slowed from a very busy Q1, with 11 announced transactions. Several large transactions in the quarter, however, generated an average seller size by revenue that significantly exceeded year-end averages dating back to 2017.

Hospital financial performance improved in April relative to both March and the same time frame last year, though a closer examination of the data shows a greater difference in performance at the hospital level.

Overall labor expenses and revenue continue to rise, and Q1 2024 data show that labor represented 84% of total expenses. The median investment/subsidy per provider increased 2% compared to Q1 2023.

Margins and volumes declined slightly in March, which may signal more challenges ahead. Hospital outpatient revenue also fell 5%, reflecting the competitive challenges of providing outpatient care.