Latest on the National Hospital Financial Picture

November 02, 2023

U.S. hospitals saw their financial performance decline slightly during September, with changing trends in patient care and labor expenses continuing to pose challenges.

The overall financial picture has improved compared to 2022, but hospitals continue to navigate a new post-COVID-19 landscape that has altered the way people receive care, the report from Kaufman Hall notes.

“While overall expenses seem to be softening as volume decreases, labor costs continue to be a challenge for hospitals and health systems,” said Erik Swanson, senior vice president of data and analytics, Kaufman Hall.

Here’s what you need to know:

• Margins:  Kaufman Hall's monthly operating margin index declined from 3.5 percent during August to 1 percent during September.
• Expenses:  Month over month, hospital labor expenses increased 1 percent, but hospitals saw expenses decrease for drugs (-5%) and supplies (-4%) per calendar day.
  • The labor expense per adjusted discharge increased 4 percent month over month.
• Trends in care:  Hospital discharges (-3%), operating room minutes (-7%), and adjusted patient days per calendar day (-2%) all declined last month.
  • The average length of stay increased slightly (1%), and emergency department visits per calendar day remained level month-over-month.
• Action steps:  The report points to several key action steps, including partnerships with group purchasing organizations, distributors, and wholesalers; creating a robust, flexible staffing pool; implementing predictive demand modeling to minimize “flexing”; and a focus on improving turnover times in procedural areas.
• Quotable:  “Hospitals and health systems need to identify long-term solutions that can address persistent workforce issues,” Swanson said.

 The report from Kaufman Hall features data from more than 1,300 hospitals and is available online.