Healthcare operating margins contract for 1st time since March

Ongoing increases in expenses were part of the drive behind lower hospital operating margins in July, according to a Syntellis report.

While such margins remained positive, they contracted for the first time since rising into the black in March, the report showed. The operating margin median for July was 1.1 percent compared to 2 percent in June, but still higher than the March through May period and 2.6 percentage points higher than July 2022.

While overall expenses were up 3.6 percent on the same period in 2022, labor expenses increased 2.1 percent. Supplies and drug costs were both up over 5 percent, the report said.

"While operating margins remain positive, the July results are a stark reminder that hospitals are on unsteady ground as they work to recover from more than a year of negative margins," said Steve Wasson, executive vice president and general manager for data and intelligence solutions at Syntellis. "Future months will show whether this is just a temporary dip on the path to more stable footing, or the beginning of a backslide into the red."

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