Margins are stable, but hospitals are on 'dangerously thin ice': Report

Hospital financial leaders can take a momentary breath of relief as revenue growth outpaced ever-increasing expenses for the second month in a row, according to the April 2023 "Syntellis Performance Trends-Healthcare" report. 

After 15 months of disappointing operating financials, the most recent Syntellis report shows margins held steady at 0.4 percent in both March and April — just enough to balance out soaring expenses.

"Our nation's hospitals and health systems remain on dangerously thin ice with extremely narrow operating margins," Steve Wasson, executive vice president and general manager for data and intelligence solutions at Syntellis, said. "Healthcare leaders are finding ways to meet evolving patient needs and grow revenues, but relentless expense increases and other economic and industry challenges threaten to plunge them back into the red at any time."

The report shows year-over-year increases in both total expenses and total non-labor expenses for the 12th month in a row. The report shows these line items increased 2.2 percent and 3.7 percent, respectively. Additionally, year over year, total labor expenses increased in 11 months in the past year, including a 1.1 percent rise in April, the report said.

"While this suggests hospitals may be stabilizing financially, margins remain extremely thin and hospitals face significant headwinds from rising levels of bad debt and charity care and ongoing expense increases, including high nursing labor costs," according to a summary of the Syntellis report.

Labor expenses for nurses increased compared to 2021 due to the ongoing nursing shortage and reports of the worsening challenge of finding skilled nurses in the next several years.

Further, total bad debt and charity care has also risen and is expected to increase further in the coming months, as 17 million people will no longer have access to Medicaid, per policy changes enacted after the May 11 end of the public health emergency,

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