Hospital Financial Performance Stabilizing in 2023
Increased hospital revenue in August drives margin improvement
CHICAGO – October 2nd, 2023 – Hospital financial performance has stabilized in 2023 compared to last year, according to the latest National Hospital Flash Report from Kaufman Hall.
Margins in 2023 Trend Upward
The median calendar year-to-date (CYTD) operating margin index for hospitals was 1.1% in August, up from 0.9% in July. Margins are still below historical levels, though positive margins are becoming more frequent in 2023.
Some Relief for Hospitals Amid Inflationary Pressures
Hospital expenses rose in August, but hospitals saw enough increased revenue to offset elevated supply and drug expenses. Labor expenses declined on a volume-adjusted basis, reflecting less contract labor utilization and more overall financial stabilization. Average lengths of stay continued to decline as well in August—down 4% month-over-month—as patients continue to resume more normal patterns of accessing care.
“This period of relative stabilization is the time for hospitals to re-engage in capital planning efforts,” said Erik Swanson, senior vice president of Data and Analytics at Kaufman Hall. “Hospitals may be feeling reluctant given the last few years, but those that wait may find themselves falling behind their competitors and missing out on key opportunities.”
August data also show a continued emphasis on care transitioning to the outpatient setting, with outpatient revenue and inpatient revenue per calendar day increasing 12% and 4% respectively on a month-over-month basis.
The National Hospital Flash Report draws on data from more than 1,300 hospitals from Syntellis Performance Solutions.
About Kaufman Hall
Kaufman Hall provides management consulting solutions to help society’s foundational institutions realize sustained success amid changing market conditions. Since 1985, Kaufman Hall has been a trusted advisor to boards and executive management teams, helping them incorporate proven methods, rigorous analytics, and industry-leading solutions into their strategic planning and financial management processes, with a focus on achieving their most challenging goals.
Kaufman Hall services use a rigorous, disciplined, and structured approach that is based on the principles of corporate finance. The breadth and integration of Kaufman Hall advisory services are unparalleled, encompassing strategy; financial and capital planning; performance improvement; treasury and capital markets management; mergers, acquisitions, partnerships, and joint ventures; and real estate.
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