Hospital expenses drop

Hospital expenses decreased month over month in March but remained high compared to 2023 numbers, according to Kaufman Hall's most recent "National Hospital Flash Report."

Hospital leadership has been focused on identifying ways to improve efficiencies and lower expenses to close profitability gaps in recent months. The tactics being deployed include leveraging technology and artificial intelligence for more efficient patient flow, resdesigning care teams and cutting waste.

"While financial performance looks solid on the surface, a closer examination of the data shows a greater divide between high- and low-performing hospitals," said Erik Swanson, senior vice president of data and analytics at Kaufman Hall. "Forty percent of hospitals in the United States are losing money. Organizations who have weathered the challenges of the last few years have adopted a wide range of proactive and growth-related strategies, including improving discharge transitions and building a larger outpatient footprint."

Nationally, total expenses per calendar day dropped 4% from February to March. The two largest expense areas typically, labor and supply, dropped 1% and 6% respectively month over month. Drug expenses per calendar day decreased 8% while purchased service was down 7%.

However, expenses are still 18% to 20% higher than in 2021 and increased even over last year's numbers. Compared to March of 2023, expenses per calendar day were up:

  • Total: 4%
  • Labor: 3%
  • Non-labor: 6%
  • Supply: 8%
  • Drugs: 8%
  • Purchased services: 3%

Operating margin also declined 4% month over month but was up 20% year over year to end the first quarter.

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