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Hospitals See Encouraging Signs to End 2023

February 07, 2024

Hospitals continued to make strides toward financial stability during 2023, while navigating the fast-changing, post-pandemic world of health care.

A new report from Kaufman Hall indicates that hospitals have worked hard to rebound from the “worst year since the beginning of the COVID-19 pandemic” and are seeing some encouraging trends in care.

“While finances are approaching historic levels, today’s care and business models look very different,” said Erik Swanson, senior vice president of data and analytics with Kaufman Hall. “Organizations have had to adjust how and where they’re delivering services to better meet patient preferences.”

Here’s what you need to know:

  • Margins:  With year-end accounting adjustments, the median calendar year-to-date operating margin index for hospitals was 2.3 percent during December.
  • Expenses and revenue:  Year-to-date, hospitals saw rising expenses per calendar day for labor (1%), non-labor (7%), supplies (5%), and drugs (6%).
    • Year-to-date, hospitals saw both inpatient revenue (4%) and outpatient revenue (11%) increase per calendar day compared to 2022.
  • Care trends:  During December, hospitals saw operating room minutes per calendar day decline 7 percent month-over-month.
    • Average length of stay declined 4 percent year-over-year.
    • “The average length of stay has declined on a year-over-year basis as hospitals have worked to establish and maintain clear pathways for patient discharge,” the report notes.
  • Action steps:  The health care analysts note key next steps for sustainability, including examining and defining discharge processes, forming strategic partnerships with skilled nursing facilities, and evaluating different models for strategic partnerships.
  • Quotable:  “These improved margins indicate that hospitals and health systems are taking the necessary steps to adapt to this new environment,” said Swanson, who is one of the speakers at HAP’s 2024 Leadership Summit.

The National Hospital Flash Report and the Physician Flash Report are available online.