Before COVID-19, such margins were at a median of about 8.4 percent. Now, the target for hospitals and systems is to reach about 7 percent by the middle of 2024.
The current operating cash flow margin, up to March 31, was 5.4 percent, an increase from 4.9 percent in 2022.
“A return to the pre-pandemic median OCF margin of 8.4% (fiscal 2019) will likely take at least multiple years, if ever achieved,” according to the report.
While labor costs have dipped from excess levels as the use of agency staff and hourly rates has dropped, salary costs for permanent staff have only risen. Salaries and wages measured at a median growth rate of 7.3 percent in the first quarter.
Supply costs, typically a system’s second largest expense behind labor, will also continue to rise, Moody’s said.
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