For hospitals, 'difficult decisions' loom after 9 months of negative margins

The third quarter brought little relief to hospitals in what is shaping up to be one of their worst financial years. 

Kaufman Hall's October National Hospital Flash Report — based on data from more than 900 hospitals — found slightly lower hospital expenses in September did not outweigh lower revenue across the board, with decreases in discharges, inpatient minutes and operating minutes.

The median year-to-date operating margin index for hospitals was -0.1 percent in September, marking a ninth straight month of negative operating margins and a dimmer outlook for their climb back into the black by year's end. 

Kaufman Hall noted that expense pressures and volume and revenue declines could force hospitals to make "difficult decisions" about service reductions and cuts. 

"Health systems are starting to get a clear picture of what service lines have a positive effect on their margins and which ones are weighing them down," said Matthew Bates, managing director and Physician Enterprise service line lead with Kaufman Hall. "Without a positive margin there is no mission. Health systems must think carefully and strategically about what areas of care they invest in for the future."

 

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