Hospital margins break even at 0%

The median year-to-date operating margin index for hospitals slightly improved in April to 0 percent, according to Kaufman Hall.

The neutral margin marks a slight improvement from the -0.3 percent recorded in March, according to Kaufman Hall's latest "National Flash Hospital Report" — based on data from more than 900 hospitals.

Hospitals saw increased bad debt and charity care and decreased inpatient and outpatient volumes in April, which Kaufman Hall experts correlate to the winding down of the COVID-19 Public Health Emergency, which ended May 11. 

"With states conducting their Medicaid eligibility redetermination, it's predicted that hundreds of thousands of people will ultimately become uninsured," Erik Swanson, senior vice president of data and analytics with Kaufman Hall, said. "The data indicate that we may already be seeing the effects of disenrollment materialize with patients less likely to seek out the care they need and a continued rise in bad debt and charity care."

Higher bad debt and charity care and lower volumes are expected to persist as states continue the process of redetermination. The process and efficiency of Medicaid redeterminations can vary from state to state, with some beginning disenrollments in April, others in May or June, and others in July or later.

Inflation continues to weigh on hospitals, with labor expense per adjusted discharge up 3 percent in April from March. Total expenses ticked downward in April, but operating revenues declined at a faster rate, down 5 percent month over month.

"In the face of operating margins that may never fully recover and inflated expenses, developing and executing a strategic path forward to a future that is financially sustainable is crucial," Mr. Swanson said. 


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