Nonprofit hospital operating margins remained steady in October with outpatient revenue growing, according to Kaufman Hall's "National Hospital Flash Report" data released Dec. 9.
The report is based on data for October 2024 from 1,300 hospitals submitted to Syntellis Performance Solutions, part of Strata. The average hospital margin shot up to 6.5% in October and increased to 4.4% year to date. But that doesn't mean financial challenges have ended for hospitals.
"Hospitals continue to experience overall financial and operational stability," said Erik Swanson, senior vice president and data and analytics group leader for Kaufman Hall. "However, supplies and drug expenses continue to put pressure on hospitals, and cost containment should be a priority. Continued growth in outpatient revenue and reductions in the average length of stay indicate that patient care is shifting to more ambulatory and outpatient care sites."
Five things to know from the report:
1. Outpatient revenue growth outpaced inpatient revenue growth. Outpatient revenue per calendar day was up 13% year over year in October and 7% month over month. By comparison, inpatient revenue increased just 1% month over month and 6% year over year.
2. Average discharges per calendar day increased 5% month over month and 7% year over year. Since 2021, the average discharges per calendar day have grown 13%.
"This led to a decrease in overall expenses on a volume adjusted basis, though supplies and drug expenses continue to grow," the report noted.
3. Supply expenses per calendar day were up 10% year over year in October, and 8% year to date compared to 2023. Drug expenses were up 7% month over month and 15% year over year in October.
4. Labor expenses per calendar day grew 7% year over year and 1% month over month in October. Since 2021, labor expenses per calendar day increased 18%. Purchased service expenses per calendar day were flat month over month but up 13% year over year.
5. Average length of stay dropped 4% year over year and 3% month over month. Observation days were also down 8% year over year as a percentage of patient days.
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