Hospital margins razor thin but stable as patient volumes rebound: Report

Hospital finances improved slightly in March, but inflation continues to burden hospitals and health systems, according to Kaufman Hall's National Hospital Flash Report released May 3. 

Four things to know: 

1. Hospital margins continued to stabilize in March, with a slight improvement over February, according to the report. But margins "continue to sit at razor-thin, near-zero levels, putting hospitals in a vulnerable position should a recession or a new public health emergency materialize."

2. Outpatient volumes remained strong in March, while the average length of stay decreased by 4 percent, hinting at a reduction in patient acuity, according to the report. Hospitals are facing an ongoing bottleneck discharging to post-acute sites of care and workforce shortages continue to hamstring hospitals' ability to treat patients admitted to their facilities. 

3. Non-labor expenses — including drug and supply costs — rose by 6 percent from February. Persisting workforce shortages are driving up the cost of labor, but at a slower pace than material costs. 

4. "As labor pressures continue, we’re seeing more and more reliance on advanced practice providers—including nurse practitioners and physician associates," said Matthew Bates, Kaufman Hall's managing director and physician enterprise service line lead. "Two of every three providers that will enter the workforce this year will be an advanced practice provider. Provider groups that hire, retain and deploy this corner of the workforce most effectively will see the most success in the long term."

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