News: Hospitals increase operating margins, still struggle to stabilize, report says

A new Kaufman Hall report has suggested that while operating margins across hospitals have improved in the last two months, hospitals still continue to struggle across a number of different metrics, HealthLeaders reported.

The analysis of the Kaufman report was based upon data provided by Syntellis Performance Solutions and compiled from over 1,300 hospitals over the past three years; the report’s data was collected across a range of geographies, hospital sizes, and hospital functions, as well.

Here are the key takeaways from the report:

• The average operating margin index was 1.4% in June 2023, a slight underperformance compared to May.
• Length of stay and emergency department visits declined, dropping 2% and 1%, respectively, in May and June.
• Operation revenue for hospitals has, on average, climbed by 2%, indicating, according to the authors of the study, that “people are continuing to shift away from inpatient settings.”
• Bad debt and charity per calendar day leveled off at a 3% increase from May to June.
• The proportion of full-time equivalents per adjusted occupied beds fell 8% from May to June.
• Lowering labor expenses (wages, benefits, etc.) helped HCA Healthcare experience higher profits ($1.193 billion) from May to June.

Regarding the lattermost of these, it would appear that, in order to maintain desirable profit outcomes, more “labor expenses” will be on the chopping block for years to come.

“As labor continues to be the largest share of expenses, health systems need to think strategically about provider employment models,” Matthew Bates, managing director and physician enterprise service line lead with Kaufman Hall said. “Organizations that want to see performance improvement must figure out how best to effectively integrate advanced practice providers into the care team model.”

Editor’s note: To read the Kaufman Hall report, click here. To read the HealthLeaders coverage of the report, click here. To read the Kaufman Hall press release, click here.