Health system margins rose slightly but expenses growth remains challenging, according to Strata’s Monthly Healthcare Industry Financial Benchmarks report released Dec. 3.
Strata gathers data from 1,900-plus hospitals across the U.S. and provides financial analysis based on the results. The most recent report found:
1. Health system margins grew slightly for the third consecutive month, hitting 1.2% in October. The average hospital operating margins increased 0.2 percentage points in October compared to 2024. Regionally, the average operating margin performance varied:
- Midwest: -0.8 percentage points
- West: -1.3 percentage points
- Northeast: +1.1 percentage points
- South: +1.1 percentage points
2. Hospitals with 25 beds or fewer reported a nearly 2 percentage point drop in operating margin while hospitals with 26 to 99 beds had the biggest gains at 1.5 percentage points. Hospitals with 500 or more beds reported a 0.5 percentage point increase.
3. Gross operating revenue increased nearly 9% year over year in October. Outpatient revenue continues to grow faster than inpatient revenue. In October, hospitals reported average gross outpatient revenue jumped 10% year over year while inpatient revenue was up 6.8%.
4. Net patient service revenue per adjusted discharge increased 3.3% year over year. However hospitals also saw a 5.3% increase in bad debt and charity care year over year in October.
5. Hospital expense growth slowed to 7% year over year increases, down from double-digit increases in September. However, supply expense growth hit a 12-month high of 9.2%.
