Hospital finances hit turning point

Hospital finances showed signs of stabilizing in May amid slightly improving operating margins, declining expenses and notable increases in outpatient visits, according to Kaufman Hall's latest "National Flash Hospital Report," which is based on data from more than 1,300 hospitals.

The median year-to-date operating margin index for hospitals hit 0.3 percent in May, up from 0.1 percent in April and March, according to Kaufman Hall. Although operating margins are slowly moving in the right direction, they remain far below historical norms. 

Hospitals also saw some downward pressure on labor costs. While labor expenses remain significant, they were well below comparable levels from May 2022, according to the report. 

Discharges, emergency department visits and operating room minutes all climbed — although very modestly on a year-to-date basis — while revenue from outpatient care continues to grow at a far greater rate than revenue from inpatient care. 

"Hospitals may no longer be experiencing the post-pandemic effect of pent-up demand for inpatient services, but patients are showing us they are becoming more comfortable with receiving care in this setting," Erik Swanson, senior vice president of data and analytics with Kaufman Hall, said. "Hospitals can expect a 'new normal' of slowly increasing margins that may never return to pre-pandemic levels without reevaluating how and where care is being delivered."

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