Hospital margins rebound, but some left behind

Nonprofit hospital margins hit 4.3% in April, up 33% year over year, according to Kaufman Hall's "National Hospital Flash Report" released June 3.

Kaufman Hall examined data from 1,300 hospitals in Syntellis Performance Solutions' database and found that while hospital margins are improving overall, so is the gap between the highest and lowest performing hospitals. The best performing hospitals had a margin of 28.9%, compared to -16.1% for the worst performing hospitals.

"While financial performance looks solid on the surface, a closer examination of the data shows a greater divide between high- and low-performing hospitals," said Erik Swanson, senior vice president of data and analytics at Kaufman Hall. "Forty percent of hospitals in the United States are losing money. Organizations who have weathered the challenges of the last few years have adopted a wide range of proactive and growth-related strategies, including improving discharge transitions and building a larger outpatient footprint."

Operating margins were up 7% month over month and year to date operating margins were 21% higher than in 2023. Operating EBITDA margin year to date was up 14% over the same period last year, and flat with hospital performance in 2021.

Net operating revenue per calendar day jumped 9% year to date in April compared, and 5% over March 2024. Inpatient revenue climbed 12 percent year over year in April.

Hospital operating margin index also increased in April to 4.3% after three months of decline.

Of note, the data revealed:

1. Outpatient revenue increased 10% year over year in April.
2. Average length of stay dropped 4% year over year in April.
3. Emergency department visits increased to hit pre-pandemic levels.

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