May hospital revenue boost not enough to offset expenses, Kaufman Hall says

Hospitals and health systems were hindered by skyrocketing expenses and depressed margins in May despite improved revenue and patient volume, according to a June 28 Kaufman Hall report. 

The median change in operating margin was up 18.9 percent in May over April, but down 45.6 percent from May 2021, according to the report. Gross operating revenue was up 3.4 percent from April and 7.6 percent from May 2021. 

The report attributed revenue increases to a rise in patient volume in May. The length of stay was up 2.3 percent from April and patient days increased by 4.8 percent. Emergency department visits increased 9.5 percent from April to May.

Total expenses rose 1.1 percent from April and 10.7 percent from May 2021, according to the report. Inflation and labor costs shortages have contributed to total costs climbing 10.4 percent year-to-date. 

"While we are seeing hospitals revenues inch up, it simply is not enough to mitigate the skyrocketing costs of material and labor expenses, resulting in negative operating margins for the nation’s hospitals and health systems," Erik Swanson, senior vice president of data and analytics at Kaufman Hall said. "Hospitals are seeing labor costs increase at every level as they compete with other hospitals and local employers to retain and attract non-clinical staff with higher wages and better benefits."

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