Hospital margins hit 3% as expenses climb

Hospital margins had a slight increase in March despite significant patient volume declines, according to Kaufman Hall’s “National Hospital Flash Report” released May 7.

Kaufman Hall, a Vizient company, analyzed data from 1,300 hospitals compiled by Strata Decision Technology. The report found:

1. Median hospital margins grew from 2.7% in February to 3.1% in March. Year to date, hospital margins hit 3.3%, an improvement from last April when the average margins were 1.9%. The first quarter operating margin increased 2 percentage points year over year, and rocketed 60 percentage points compared to the first quarter of 2022.
2. Revenue was flat on average despite patient volume declines, according to the report. The median net operating revenue per calendar day dropped 4% month over month but was up 9% year over year. Inpatient and outpatient revenue per calendar day was up 10% over the same period last year.
3. Discharges per calendar day dropped 5% from February due to fewer patients with the flu and other respiratory illnesses, according to the report. However, discharges were up 4% year over year and 9% compared to 2022. Emergency department visits also dropped 5% month over month but were up 2% year over year.
4. Total expenses per calendar day increased 7% year over year, driven by supply and drug expenses. Here is the broader expenses per calendar day breakdown:

• Labor: 6%
• Non-labor: 9%
• Supply: 11%
• Drugs: 11%
• Purchased services: 10%

5. Bad debt and charity care per calendar day dropped 7% compared to February, but were up 9% year over year and 32% compared to 2022.

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