Hospitals Continue to Face Financial Challenges

May 02, 2024

Hospitals are grappling with uneven financial conditions, with operating margins, volume, and outpatient revenue all declining during March.

Released today, the Kaufman Hall National Hospital Flash Report provides the latest look at how hospitals are responding to changing financial forecasts that may signal more uncertainty, the report notes.

“Declines in outpatient revenue mean hospitals providing outpatient care may face difficulties ahead,” said Erik Swanson, a senior vice president with Kaufman Hall.

Among the key takeaways:

• Margins decline:  Kaufman Hall’s Calendar Year to Date Operating Margin Index was 3.9 percent during March, down 0.2 percentage points from the prior month.
• Action steps:  The report emphasizes the importance of strategic partnerships and opportunities to expand growth in high-performing services and to embrace “investments in consumer-friendly offerings.”
• Cost of care:  Hospitals saw year-to-date increases for labor (3%), purchased services (3%), supplies (8%), and drugs (8%) per calendar day.
• Declining outpatient revenue:  Outpatient revenue per calendar day declined 5 percent month-over-month, while operating room minutes decreased 6 percent.
• Quotable:  “Organizations may need to reevaluate their assets and consider strategic partnerships to offset current and future challenges with volume,” Swanson said.

The report from Kaufman Hall is the first to include a full month of data following the Change Healthcare cyberattack. Hospitals are still working to address disruptions stemming from the incident.

The Kaufman Hall report includes data from 1,300 sampled hospitals and is available to review online.