U.S. Hospitals Face Continued Financial Strain

November 30, 2022

The nation’s hospitals have faced “one of the worst financial years on record,” and the pressures continued during October, according to the latest Kaufman Hall flash report. 

The Kaufman Hall report, released today, indicated that the year-to-date operating margin index for hospitals was -0.5 percent through October, with elevated expenses continuing to outpace revenues last month.

“Record-high expenses across the economy have not eased up, leaving hospitals in a precarious financial position as we look to the end of the year,” said Erik Swanson, senior vice president of data and analytics with Kaufman Hall. 

Among the key takeaways:

• Margins:  For the tenth consecutive month, hospital operating margins were in the red during October. Operating margins dropped 2 percent from the previous month and 13 percent from October 2021.
• Expenses:  Total expenses are up 1 percent from September and 8 percent year-to-date. Labor expenses are up 3 percent from September and 10 percent year-to-date.
  • On the positive side, hospitals saw supply (-1%) and drug (-4%) expenses decrease month-over-month.
• Emergency department time:  Emergency department visits (3%) and operating room minutes (2%) both increased from September.
• Length of stay:  Kaufman Hall noted that staffing shortages—internal and post acute—contributed to challenges discharging patients and longer length of stay (3%) during October.
• Quotable:  “Every aspect of patient care—from being admitted, to treatment, to discharge—is affected by the labor shortage and as we head into the virus season and potential new waves of COVID-19 the pressures on hospitals and their staff could mount,” Swanson said.

The Kaufman Hall report includes both actual and budget data from the last three years from a representative sample of more than 900 hospitals. The report includes data by hospital beds, as well.

The report is available to review online.