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Hospitals Saw Some Financial Stability during August

October 02, 2023

Hospitals saw some encouraging financial signs during August, but margins remain below historical levels, according to a new national report.

Today, Kaufman Hall released its monthly National Hospital Flash Report, indicating that hospital financial performance had begun to stabilize in recent months as trends in care inch closer to ”normal.”

“This period of relative stabilization is the time for hospitals to re-engage in capital planning efforts,” said Erik Swanson, senior vice president, data and analytics, Kaufman Hall. “Hospitals may be feeling reluctant given the last few years, but those that wait may find themselves falling behind their competitors and missing out on key opportunities.”

Here’s what you need to know:

  • National margins:  The median calendar year-to-date operating margin index for hospitals was 1.1 percent during August, up from 0.9 percent during July.
    • Margins are still below historical levels, but have been positive for six straight months. Before that, hospitals endured six straight months with negative average margins.
  • Finding balance:  During August, increased revenue (+8% net operating revenue per calendar day) helped offset elevated drug (+11%) and supply (+13%) expenses.
  • Trends in care:  August continued to show the shift in care to outpatient settings. Outpatient revenue and inpatient revenue per calendar day increased 12 percent and 4 percent month-over-month, respectively.
  • Key consideration:  As hospitals continue to focus on their financial recovery after the pandemic, they also must consider how to “reinvigorate strategic financial and capital planning efforts,” the report notes.
  • Quotable:  “Average lengths of stay continued to decline as well in August—down 4 percent month-over-month—as patients continue to resume more normal patterns of accessing care,” Kaufman Hall noted in its report release.

The National Hospital Flash Report uses data from more than 1,300 hospitals and is available to review online.