Hospitals continue to show signs of financial recovery, with a new report from Kaufman Hall revealing positive trends in margins, outpatient revenue, and operating room activity for the month of April. This follows a relatively strong first quarter for the healthcare sector, suggesting a sustained improvement from the financial hardships faced during the pandemic.
The report, available in PDF format, highlights a month-over-month increase in key performance metrics. Outpatient revenue, a crucial source of income for hospitals, saw a 1% rise compared to March. This positive trend extends year-over-year as well, with a 3% increase in net patient service revenue per adjusted discharge. Operating room minutes also climbed by 6% from March, and by 10% when compared to April 2023. This signifies a busier surgical environment, potentially reflecting a return to more elective procedures that were delayed during the peak of the pandemic.
However, the report also acknowledges a return to pre-pandemic levels of emergency department (ED) visits. Daily ED visits climbed by 1% compared to March and are currently at 4% above pre-COVID levels. This upsurge adds pressure to hospitals and healthcare systems, potentially requiring them to manage a higher influx of patients requiring immediate care. While daily discharges also saw a slight increase of 1% month-over-month, the average length of stay has decreased. This suggests a return to typical care patterns and potentially improved efficiency in transitioning patients to post-acute care settings.
Despite the overall positive outlook, the report from Kaufman Hall indicates a potential “new normal” for hospital margins. While margins have shown improvement compared to the past few years, growth has slowed down in recent months. A deeper analysis reveals a significant disparity between high-performing and low-performing hospitals. According to Erik Swanson, Kaufman Hall’s senior vice president of data and analytics, “Forty percent of hospitals in the United States are losing money.” He points out that organizations that have navigated the challenges of the past few years have adopted proactive strategies, such as optimizing discharge transitions and expanding their outpatient footprint.
Looking at the broader financial picture, the Kaufman Hall report highlights a 1% month-over-month increase in daily net operating revenue and daily gross operating revenue. Total expense per adjusted discharge also showed a 3% year-over-year decrease, indicating potential cost-saving measures being implemented by hospitals. This trend aligns with the positive earnings reports released by major for-profit hospital chains like HCA Healthcare and Tenet Healthcare in early May. Both companies reported increases in year-over-year revenue and patient volume.
The data used in Kaufman Hall’s monthly reports comes from over 1,300 U.S. hospitals and is collected by Syntellis Performance Solutions, a subsidiary of Strata Decision Technology (formerly Kaufman Hall Software). These reports provide valuable insights into the financial health of the healthcare sector, allowing for informed decision-making by hospital administrators and industry stakeholders.
While hospitals are experiencing a period of financial recovery, challenges remain. Managing a higher volume of ED visits alongside cost-containment strategies will be crucial for maintaining financial stability. Additionally, addressing the disparity between high-performing and low-performing hospitals is critical to ensure the overall health of the healthcare system. The ongoing efforts of hospitals to adapt and innovate will be key in navigating this “new normal” and ensuring continued improvement in patient care and financial performance.
