Kaufman Hall: Hospitals Face ‘Worst Financial Year’ in a Long Time

August 30, 2022

The nation’s hospitals faced the “worst margins since the beginning of the pandemic” during July, according to the latest Kaufman Hall National Hospital Flash Report.

Released this week, the report indicated that hospitals saw lagging outpatient volumes and increasing expenses in July when compared to the previous month. These challenges are only accelerating as the funding to help offset the effects of the pandemic has expired, the report noted.

“July was a disappointing month for hospitals and put 2022 on pace to be the worst financial year hospitals have experienced in a long time,” said Erik Swanson, senior vice president of data and analytics with Kaufman Hall.

Here’s what you need to know:

• Challenging Margins:  Kaufman Hall’s national median year-to-date operating margin index was just below -1 percent, marking the seventh straight month of negative actual operating margins. The median percent change in operating margin for July was -63.9 percent from June.
• Patient acuity, volume:  The average length of stay increased 2 percent from June, but outpatient volume appeared to decline for hospitals. Operating room minutes decreased more than 10 percent month over month.
• Revenue:  Month over month, national gross operating revenue and outpatient revenue were down 3.6 percent and 4.8 percent, respectively.
• Expenses:  Declines in expenses did not offset revenue losses. Total expenses decreased just 0.4 percent from June. The labor expense per adjusted discharge increased 3.5 percent from June and 14 percent year to date.
• Quotable:  “Over the past few years, hospitals and health systems have been able to offset some financial hardship with federal support, but those funding sources have dried up, and hospitals' bottom lines remain in the red,” Swanson said.

The Kaufman Hall report includes data from 900 hospitals to provide an overview of the financial outlook for U.S. hospital and is available to review online.

A recent Physician Flash Report also is available.