Operating margins in January were 5.1%, down from 5.5% reported in December. Kaufman Hall collects data from more than 1,300 hospitals to report on national averages. Operating margins have fluctuated in the last 12 months, from a -1.2% low in February 2023 to 5.5% highs in June and December.
The report noted net revenue is rising, but not as fast as gross revenue. Net operating revenue per calendar day was up 1% month over month while gross operating revenue per calendar day increased 5%. Year over year, both grew 10% in January.
The faster net operating revenue growth could be attributed to payers negotiating “more aggressively” as well as a focus on value-based care models, according to the report.
Kaufman Hall noted labor expenses improved, and drug and supply expenses are growing. Here is a breakdown of expenses in January:
Total expenses per calendar day
1. Month over month: 3% growth
2. Year over year: 6% growth
Labor expenses per calendar day
3. Month over month: 3% growth
4. Year over year: 4% growth
Supply expenses per calendar day
5. Month over month: 4% growth
6. Year over year: 11% growth
Drugs expense per calendar day
7. Month over month: 6% growth
8. Year over year: 13%
Finally, Kaufman Hall mentioned the highest performing hospitals have adopted effective advanced analytics and artificial intelligence strategies while the lowest performing hospitals did not.
