Oct 3, 2023 - Health

Hospitals' post-COVID fortunes improving

Adriel Bettelheim

A hospital sign with the 'H' replaced with a dollar sign — Illustration: Lazaro Gamio/Axios

Rising revenue helped hospitals balance out higher supply and drug costs in August, stabilizing the sector's financial performance and keeping operating margins in positive territory, a new Kaufman Hall report finds.

The big picture: The industry's post-pandemic fortunes continue to improve as patients return to more normal patterns of care. But the positive trend line comes as Congress weighs Medicare changes that could reduce payments to health systems.

By the numbers: Facilities' year-to-date operating margin index in August stood at 1.1%, up from up from 0.9% in July, according to data from more than 1,300 hospitals.

Average patient lengths of stay continued to decline, down 4% month-over-month.
Labor expenses fell on a volume-adjusted basis, reflecting less use of contract workers. Year-to-date labor expense per day was just 1% over 2022.

Yes, but: Margins, or the percentage of revenue kept as profit, are still below historical levels. And a surge of newly uninsured people from Medicaid redeterminations could swamp some health systems as they continue to grapple with supply chain problems and staffing shortages.

What we're watching: Hospitals that are successfully fending off inflationary pressures will have to decide how quickly to restart capital investments that were deferred during the financial squeeze.

Add Axios on Google

Hospitals' post-COVID fortunes improving

What to read next