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The latest Kaufman Hall Report includes highlights from the 35th annual Healthcare Leadership Conference, which featured high-level thinking and reflection on how our industry’s ongoing transformation will progress into the future.

While patient volumes decreased this month, expenses rose. The workforce continues to be competitive as labor expenses rose despite the dip in patient volumes.

The numbers from hospital and health system M&A activity in 2024 confirm the unevenness of recovery and the challenges that many organizations continue to face. The percentage of transactions involving a financially distressed party and the percentage of transactions involving a divestiture both reached record highs.

This month’s data show general stability, with continued growth in outpatient revenue and expense reductions on a volume-adjusted basis.

Numerous headwinds in recent years have threatened liquidity, exposed organizations to counterparty risk, and heightened uncertainty about long-term financial sustainability. This report discusses six trends and related action steps to help position your organization for tomorrow’s Treasury Operations needs.

Though most indicators were down, hospital performance remained relatively stable overall, according to September data. Both inpatient revenue and average lengths of stay increased.

In the third quarter of this year, the median investment/subsidy per physician was $304,312—rising above $300,000 for the first time. Other expense metrics such as the total direct expense per provider FTE and labor as a percentage of total expenses increased.

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.