Nonprofit hospital margins dipped in May as expenses grew and health systems strategically planned for care shifting to the outpatient setting, according to Kaufman Hall’s most recent “National Hospital Flash Report.”
Kaufman Hall released the report July 13, including data from more than 1,300 hospitals gathered by Strata Decision Technology. Report authors noted outpatient revenue has grown year-over-year for the last several months and many health systems are “proactively adapting portfolios and operations to support the future of U.S. healthcare delivery.”
Five things to know:
1. The average year-to-date margins dropped from 3.6% in April to 2.9% in May, which is still above where hospitals started the year at 2.1%. The median operating margin for nonprofit hospitals in May, including allocations, was 2.7%.
2. Operating margins dropped 6% month over month and 4% year over year on average. Here is the regional breakdown for year-over-year margin change:
- West: -6%
- Midwest: -2%
- South: -12%
- Northeast / Mid-Atlantic: -1%
- Great Plains: -3%
3. Average net operating revenue per calendar day grew 5% year over year and 24% over the first five months of 2023. Gross operating revenue per calendar day was up by similar margin. Inpatient and outpatient revenue both increased 6% year over year in May.
“Health systems must adapt their portfolios and operations to support the future of care delivery,” said Erik Swanson, managing director and leader of the data and analytics group at Kaufman Hall. “Reevaluation of organizational strategies and resource allocation may also unlock new opportunities to maximize effectiveness going forward.”
4. The average expenses per calendar day rose 5% year over year and 21% compared to the first five months of 2023. Expenses per calendar day across all categories grew over the last year:
- Labor: 5%
- Non-labor: 5%
- Supply: 4%
- Drugs: 1%
- Purchased services: 4%
5. Expenses for all categories soared 20% to 25% since 2023.
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