Hospital margins see no relief to start the year

The year is off to an unfriendly start for hospital finances, with a median margin of -1 percent for January, worsening from the margin recorded a month prior, according to Kaufman Hall.

The finding comes from Kaufman Hall's latest "National Flash Hospital Report" — based on data from more than 900 hospitals. The -1 percent margin captured in January arrives on the heels of 2022 being the worst financial year for hospitals and health systems since the start of the COVID-19 pandemic.

 Hospitals recorded decreased patient volumes, emergency department visits, discharges and total revenues in January 2023 compared to the month prior while expenses ticked upward. Month-over-month, total net operating revenue decreased by 3 percent while total expenses rose by 1 percent, with total labor expenses increasing by 3 percent. 

 Another contributing factor to the negative median margin is the ordinary trend of hospitals making purchases for the year in January, Kaufman Hall analysts noted. 

 "While we have seen a stabilization in operating margins over the past several months, the trendline continues to show that hospitals will be in a tough spot financially for the foreseeable future," Erik Swanson, senior vice president of data and analytics with Kaufman Hall, said. "With future COVID surges possible and challenging financial months ahead for hospitals, managing cash on hand will be critical to weathering the storm."

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