Individual hospitals saw a 0.3% increase in margins last month, hitting 6.3% in January. The report, which includes data from 1,600 hospitals, showed expenses continue to grow at a fast pace, driven by supply expenses. Patient demand for hospital services is up as well, with inpatient admissions outpacing outpatient visits for the month.
“Health systems across the country had a shaky start to 2025,” said Steve Wasson, chief data and intelligence officer at Strata. “While health system operating margins largely stabilized in 2024 after the turbulence of the pandemic, they remained uncomfortably thin. We saw encouraging trends with gross revenue growth outpacing expense increases last year. These and other positive performance trends will need to continue in 2025 in order for the health system to build a more stable foundation for operating margin growth.”
Hospitals reported 21 consecutive months of year-over-year gross revenue increases in January. Both inpatient and outpatient revenue increased, with outpatient revenue up 9.2% and inpatient revenue up 6.7% year over year. Operating revenue was up 9% for health systems and 7.5% for hospitals year over year.
Health system expenses grew slower, at 6.4%, while hospital expenses were up 5.4%. Labor expenses increased 5.7% on average for health systems despite lower contract labor costs. Contract labor dropped 22.7% for health systems and 37.5% of hospitals year over year.
