Hospital margins see no improvement
Hospitals are still struggling heading into the end of the year, with operating margins firmly in the red during the month of September, according to the latest National Hospital Flash Report from Kaufman Hall.
Hospital margins were -0.1% during September, compared to -0.5% in August and -1.1% in July. Margins for the year to date are also negative, Kaufman Hall noted, as the modest gains have not been enough to flush out worse months.
“Just a few months remain in what is shaping up to be one of the worst financial years for hospitals,” wrote Erik Swanson, senior vice president at Kaufman Hall and author of the report. “Hospitals faced decreasing revenues and treated sicker patients. Hospitals did, however, see slightly lower expenses, but the drop was not enough to offset revenue decrease.”
The margin squeeze comes as global economic conditions have worsened throughout the year, including near-record inflation rates in the U.S. In addition, higher costs, a tightening labor market and ongoing impacts from the COVID-19 pandemic are hitting bottom lines.
Hospitals are also facing declining revenues, “with declines in discharges, inpatient minutes, and operating minutes,” Kaufman Hall wrote in its report. As Swanson noted, hospitals are seeing sicker patients, which has impacted discharges and length of stay with more observation days. In addition, hospitals are experiencing labor shortages in post-acute care settings.
One bright note for the month was a slowing of rising expenses. However, the slight decrease in expenses did not offset expense pressures and volume and revenue declines during the month.
“Year to date, when adjusted for volume, expenses have actually increased; they have improved year over year and month over month, however,” the report found.
Heading into the end of the year, it is still likely that many hospitals will see losses for the year.
Amy joined TriMed Media as a Senior Writer for HealthExec after covering home care for three years. When not writing about all things healthcare, she fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."