Hospital Margins Stabilize Heading into Q2 as Revenues, Patient Volumes Continue to Grow, According to New Strata Data
May 23, 2024
CHICAGO – May 23, 2024 – The nation’s hospitals and health systems saw strong financial performance in April as patient demand and revenues rose, according to new data from Strata Decision Technology.
April marked the 12th consecutive month of year-over-year (YOY) gross revenue increases across both inpatient and outpatient metrics. Hospital outpatient revenue had the biggest increase, rising 15.3% YOY as demand for convenient outpatient services remains high. Inpatient revenue was up 11.7%, helping to push overall gross operating revenue up 14.1% YOY.
Healthy revenue growth contributed to steady hospital operating margins. The median, year-to-date hospital operating margin — which represents the average, actual operating margin for hospitals nationally — held firm at 4.7% for a second consecutive month.
“Hospitals and health systems continue to see encouraging financial performance as we head into the second quarter of the year,” said Steve Wasson, chief data and intelligence officer at Strata Decision Technology. “The data indicate that many healthcare leaders are finding effective strategies to navigate persistent high expenses. They are successfully moving their organizations to more stable ground and away from narrower margins that plagued hospitals throughout 2023.”
Looking at how margins have shifted over time, the median change in operating margin rose 4.2 percentage points from April 2023 to April 2024, and was up 1.1 percentage point compared to March 2024.
Patient volumes increased across most measures in April for healthcare organizations nationwide. Outpatient visits had the biggest increases, up 12.9% YOY and 4.6% versus the prior month. Inpatient admissions were flat month-over-month but rose 9.7% YOY, due in part to the effects of January’s expansion of the Two-Midnight Rule to Medicare Advantage patients. Other volume metrics also increased YOY, with emergency visits up 3.3% YOY and observation visits up 0.8%.
At the same time, hospitals continued to feel the pressures of ongoing expense increases. Total non-labor expense had the biggest increase at 10.5% YOY, driven by sizable increases in supply expense (16.7%) and drugs expense (14.9%) over the same period. The increases were a return to recent trends after supply expense was essentially flat and drugs expense decreased in March. Total labor expense rose 4.1% and total expense was up 7.4% from April 2023 to April 2024.
Read Strata’s Monthly Healthcare Industry Financial Benchmarks to learn more.
About the Data
This report uses data from Comparative Analytics and Strata’s StrataSphere® database. Comparative Analytics offers access to near real-time data drawn from more than 135,000 physicians from over 10,000 practices and 139 specialty categories, and from 500+ unique departments across more than 1,600 hospitals. Comparative Analytics also provides data and comparisons specific to a single organization for visibility into how their market is evolving. StrataSphere is a unique and comprehensive data-sharing platform that helps providers leverage the power of a network that represents approximately 25% of all provider spend in U.S. healthcare. This report incorporates data from 646 hospitals from 122 health systems with StrataJazz® Decision Support, as reported in the National Patient and Procedure Volume TrackerTM.
About Strata Decision Technology
Strata Decision Technology provides a cloud-based platform for software and service solutions to help organizations better analyze, plan, and perform in support of their missions. With the combination of Syntellis Performance Solutions’ Axiom solutions, more than 2,300 organizations rely on Strata to provide their financial analytics, planning, and performance solutions. Strata has been named the market leader for Business Decision Support for 18 consecutive years. By uniting these two industry leaders, Strata continues to deliver market-leading solutions and world-class service, with an increased focus on accelerating innovation. For more information, please go to www.stratadecision.com.
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