U.S. Hospitals' Financial Performance Stabilizes but Fails to Reach Pre-Pandemic Levels
Kaufman Hall analysis shows slow increases in margins, increased reliance on outpatient services stand behind hospitals ‘new normal’
CHICAGO – June 27Th, 2023 – Hospital finances showed signs of stabilizing in May, amid slightly improving operating margins, declining expenses and notable increases in outpatient visits, according to the latest National Hospital Flash Report from Kaufman Hall.
Median YTD Operating Margin Slowly Regains Positive Territory
The median year-to-date (YTD) operating margin index for hospitals was 0.3% in May, up slightly compared to 0.1% in April and March. Although operating margins are slowly regaining positive territory, they are well below levels during the latter half of 2021 and prior to the pandemic.
Patients Regain Comfort With Hospital Care
Adjusted discharges per calendar day, emergency department visits per calendar day and operating room minutes per calendar day each increased between April and May 2023 and between May 2022 to May 2023 respectively.
“Hospitals may no longer be experiencing the post-pandemic effect of pent-up demand for inpatient services, but patients are showing us they are becoming more comfortable with receiving care in this setting,” said Erik Swanson, senior vice president of Data and Analytics with Kaufman Hall. “Hospitals can expect a ‘new normal’ of slowly increasing margins that may never return to pre-pandemic levels without reevaluating how and where care is being delivered.”
Outpatient Services Increasingly Drive Hospital Revenue
Net operating revenue per calendar day was 9% higher in May 2023 compared to May 2022, while outpatient revenue per calendar day rose 14% over the same time frame.
“Now that hospital finances are showing signs of stabilization, it’s an opportune time for executives to reevaluate their longer-term business strategy,” said Swanson. “The continuing shift in patient demand from inpatient to outpatient services is particularly important and will inform business decisions for years to come.”
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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