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The Financial Challenges U.S. Hospitals Face

November 21, 2023

U.S. hospitals are “caught in a vise of declining cash reserves and rising reimbursement delays and denials” that continue to place them in an uncertain financial position.

A new report from Syntellis and the American Hospital Association outlines the financial conditions challenging hospitals coming out of the pandemic. Low margins and cash reserves have made our country’s hospitals vulnerable to potential shifts in the market or disruptions, the report notes.

“The latest data highlight the persistent challenges that hospitals and health systems face in having the financial resources needed to maintain access to care for their patients, and to be prepared for the next crisis that may arise at any time,” the report notes.

Here are five key takeaways to know from the report.

  • Cash reserves:  The median cash reserves (days cash on hand) for U.S. hospitals dropped 28 percent from January 2022 (173 days) to June 2023 (124 days).
  • Expenses:  Maintenance expenses rose the most from January 2022 to July 2023 (+89.8%), followed by utilities (+35%), professional fees (33%), and drug expenses (29.8%)
    • Labor expenses rose 24 percent during that time.
  • Coverage challenges:  From January 2022 to July 2023, the precent change in overall revenue reductions related to Medicare advantage (55.7%) and commercial (20.2%) coverage denials both increased.
  • Accounts receivable volatility:  The amount of money hospitals have in accounts receivable can vary significantly from month to month for commercial and Medicare Advantage payors.
    • For every $1 million in net patient service revenue, the dollar amounts in accounts receivable fluctuated by as much as $14,287 for commercial payors and $8,872 for Medicare Advantage.
  • Notable:  A recent American Medical Association survey indicated physicians and staff spend 14 hours each week working on prior authorization requests.

The Hospital Vitals report includes data from more than 1,300 hospitals and health systems and compares data from early 2022 to mid-2023.

The report can be accessed online.