Hospital profitability on the rise

As operating margins inch upward, hospitals are trending to profitability. But their performance still isn't at pre-pandemic levels.


For the first three quarters of 2023, hospital operating margins were up 19% and operating EBITDA was up 11% compared to the same period last year, according to Kaufman Hall's October National Hospital Flash Report. Net operating revenue per calendar day saw a 6% increase and even inpatient revenue was up 3%. Compared to 2020, year-to-date operating margins in September were down 2% and operating EBITDA margins were down 9%.

Hospitals in the south reported the biggest boom with a 50% increase in operating margins and 25% bump in operating EBITDA margin through September, compared to the first three quarters of 2022.

Large hospitals in particular with more than 500 beds are seeing big gains; those hospitals reported 80.2% growth in operating margins and 72.3% operating EBITDA margin year to date compared to 2022. Month-over-month, 500-plus bed hospitals reported a 1.5% operating revenue increase in September.

Hospitals with 100-199 beds reported 21.1% operating margin increase and 13.3% operating EBITDA margin growth in 2023 through September, and month-over-month drops were in the low single digits.

Even smaller hospitals saw positive results. Hospitals with 25 or fewer beds reported 10.1% operating margin increase this year so far compared to last year. However, month over month operating margins dropped by nearly 15% in September.

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