Hospitals show signs of recovery and growth, but disparities persist

Hospital performance improves: ©Spiroviewinc - stock.adobe.com

Recent data from Kaufman Hall's National Hospital Flash Report indicates positive trends in hospital performance, pointing toward ongoing stabilization and growth. However, despite improvements, the gap between high and low performers remains substantial, illustrating the varied impact of the pandemic and economic challenges on different health care institutions.

Positive Operating Margins in November

In November, hospitals exhibited signs of recovery as operating margins continued to improve, according to the latest data from Kaufman Hall’s National Hospital Flash Report. The report highlights a positive shift, indicating that hospitals are gradually rebounding from the prolonged impact of the pandemic and subsequent economic uncertainties. However, the report underscores the considerable disparities in performance across the health care sector.

Operating margins for hospitals showed improvement in November compared to the same period the previous year. The median calendar year-to-date operating margin index for hospitals reached 2% in November 2023, signaling positive momentum in financial recovery. Inpatient and outpatient revenue saw year-over-year increases of 5% and 9%, respectively. Notably, total expense per adjusted discharge declined, while revenue per adjusted discharge increased—a promising sign of financial recovery within the hospital sector, according to the report.

Patient Acuity Levels Normalize

The report showed a 6% year-over-year decline in the average length of stay for patients in hospitals. This decline suggests that patient acuity, or the severity of illness, is returning to more normal levels. Health care organizations that have embraced value-based and bundled payment models are poised to benefit as they adapt to provide care in the most appropriate clinical settings, according to the study.

Erik Swanson, senior vice president of data and analytics, Kaufman Hall, said strategic growth in the current landscape is important.

"As performance indicators stabilize, hospitals should take advantage of the relative stability and re-embrace strategic growth if they hope to see continued success in 2024,” said Swanson. “Growth strategies may vary from hospital to hospital, but all leaders should ensure that they are supporting goals beyond just profitability and scale, including business model transformation and diversification.”

The National Hospital Flash Report draws insights from data collected from over 1,300 hospitals through Syntellis Performance Solutions, providing a comprehensive overview of the current state of hospital performance.