Monthly Healthcare Industry Financial Benchmarks

Overview: U.S. Hospitals See Financial Performance Stabilize Throughout 2024 

This report highlights the latest trends in financial performance for U.S. hospitals and physician groups, drawn from monthly data from more than 135,000 physicians and over 1,600 hospitals.  

Healthcare organizations nationwide saw margins and revenues strengthen over the course of 2024, even as expenses continued to climb. Highlights from the year-end data include: 

• Hospital and health system operating margins closed 2024 on high note, rising to 6% and 2.1%, respectively, and showing more stable performance throughout 2024 after years of volatility. 

• Non-labor expense growth outpaced labor expense increases for the year, with total non-labor expense up 5.8% and total labor expense rising 4.2% for all of 2024 versus 2023. 

• Patient demand increased across most metrics to close the year in December as outpatient visits rose 6.3% and inpatient admissions rose 4.5% year-over-year for the month. 

• Hospital revenues remained strong throughout 2024, with December marking the 20th consecutive month of year-over-year increases in gross operating, inpatient, and outpatient revenues.  

• Physician practices saw some improvements in the fourth quarter, including a 9.8% drop in the level of investment needed to support physician practices compared to Q3. 

Hospital Performance Benchmarks  

The latest benchmarks illustrate the interplay of revenues and expenses on historically tight hospital operating margins. 

Operating Margins: Operating margins for the nation’s hospitals and health systems largely stabilized in 2024 following years of instability since the pandemic hit in 2020. The median year-to-date (YTD) operating margin for hospitals nationwide held above 4.5% each month throughout 2024 and climbed to 6% to close the year in December. The median YTD operating margin for health systems held above 1.5% throughout the year and rose to 2.1% in December. 

Looking at how operating margins have changed over time, the median change in hospital operating margin for December rose 1.4 percentage points year-over-year (YOY) and 2.1 percentage points month-over-month. Operating margin changes varied significantly for hospitals in different regions, ranging from being flat YOY for hospitals in the Midwest to increasing 4.0 percentage points YOY for those in the West. 

The median change in operating earnings before interest, taxes, depreciation, and amortization (EBITDA) margin for hospitals nationally was up 1.2 percentage points YOY, and 2.1 percentage points from November to December 2024. For the year as a whole, the median change in operating margin was up 1.5 percentage points from 2023 to 2024, while the median change in operating EBITDA margin was up 1.2 percentage points over the same period. 

Hospital Expenses: At the same time, hospitals continue to contend with rising expenses. While expenses increased across all categories, non-labor expense growth outpaced labor expense increases for the year. Total hospital expense for the full year rose 5.4% from 2023 to 2024, total labor expense increased 4.2%, and total non-labor expense was up 5.8%. Supply expense had the biggest annual increase compared to other expense metrics, jumping 6.9% from 2023 to 2024. 

For December, total hospital expense was up 6.3% YOY and 2.8% month-over-month. Total labor expense increased 4.9% YOY and 2.4% month-over-month, while total non-labor expense increased 6.5% YOY and rose 3.0% from November to December 2024. 

Rising costs for supplies and purchased services contributed to higher non-labor expenses. Hospital supply expense was up 7.8% YOY. Purchased service expense again had the biggest YOY jump at 8.5% for the month. 

Expense increases eased after adjusting for patient volumes. For December 2024 versus December 2023, total expense per adjusted discharge rose 1.5%, labor expense per adjusted discharge was up 1.3%, and non-labor expense per adjusted discharge increased 1.7%. 

For the year as a whole, changes in patient-adjusted expenses were minimal. Total expense per adjusted discharge was up just 0.7%, labor expense per adjusted discharge rose 0.1%, and non-labor expense per adjusted discharge increased 1.9% from 2023 to 2024. 

Hospital Revenues: Hospital revenues remained strong throughout 2024. December marked the 20th consecutive month of YOY increases in gross operating, inpatient, and outpatient revenues. Outpatient revenue had the biggest YOY increase, jumping 10.2% YOY in December and 3.8% month-over-month. Inpatient revenue was up 4.7% YOY and 7.1% month over month, and gross operating revenue increased 8.5% YOY and 5.0% from November to December. By region, hospitals in the Great Plains had the biggest YOY increase in outpatient revenue at 13.2% while hospitals in the Midwest had the least increase at 7.6% YOY. 

Strong revenue performance was also reflected in the full-year results. Gross operating revenue was up 7.5% and inpatient revenue rose 6.1% from 2023 to 2024. Outpatient revenue increased 8.0% from 2023 to 2024, reflecting continued growth in patient demand for more convenient and lower cost outpatient services. 

Net patient service revenue (NPSR) per adjusted discharge was up 3.5% YOY in December and rose 4.3% for all of 2024 versus 2023. NPSR per adjusted patient day rose 3.7% YOY for the month and was up 5.6% for the full year versus 2023. 

 

 

Patient Volume Benchmarks

Hospital inpatient and outpatient volumes drawn from analysis of more than 10 million patient visits. 

U.S. hospitals saw patient demand increase across most metrics to close the year in December, with outpatient visits seeing the biggest growth. Outpatient visits were up 6.3% YOY, inpatient admissions rose 4.5% YOY, and observation visits increased 2.1% YOY. Emergency visits decreased slightly at 0.9% YOY. Compared to the prior month, inpatient admissions jumped 8.2%, observation visits increased 3.3%, and emergency visits were up 5.9%. Outpatient visits decreased 0.9% from November to December 2024. 

Patient volumes varied widely across different service lines on both an inpatient and outpatient basis, according to the latest data from November 2024. The infectious disease service line had the biggest YOY decrease, with patient volumes down 11.3% YOY, followed by the ear, nose, and throat (ENT) service line, which had a decrease of 8.4%. The neurosciences service line had the biggest YOY increase in patient volumes at 3.3% over the same period. 

Patient volume trends also were mixed when looking at 15 common procedure types. Of those, 10 saw YOY declines while five saw YOY increases. Outpatient positron emission tomography (PET) had the biggest YOY increase at 10.9%. Inpatient primary knee replacements had the biggest YOY drop at 21.2%, as more patients demand such procedures in an outpatient setting. 

Children’s hospitals saw inpatient admissions decrease 2.8% and emergency visits decrease 1.0% YOY while outpatient visits grew 1.3% and observation visits rose 1.7% YOY. 

 

 

Physician Practice Benchmarks 

A look at last quarter’s key performance indicators from more than 10,000 physician practices. 

 

Physician practices nationwide saw some improvements in key performance metrics in the fourth quarter of 2024, even as expenses continued to rise. The level of investment needed to support physician practices decreased for the quarter, with the median investment per physician full-time equivalent (FTE) dropping to $290,465 for Q4, down 0.9% compared to Q4 2023 and down 9.8% versus Q3 2024. 

Meanwhile, per physician expenses continued to climb. The median total direct expense per physician FTE held at about $1.1 million for the quarter, representing a 1.4% increase from Q3 2024 and a 6.8% jump from the fourth quarter of 2023. Physician revenues remained on the rise. The median net revenue per physician FTE was $820,465 for the fourth quarter, up 12.7% from Q3 2024 and 17.7% from Q4 2023. 

The median physician work relative value units (wRVUs) per FTE were 6,451.37 for the fourth quarter, up 1.3% compared to Q3 2024 and 10.8% from Q4 2023. Meanwhile, median support staff FTEs per 10,000 wRVUs — a measure of staffing levels and productivity — were 2.89 for the quarter, down 0.6% compared to Q3 2024 but up 2.3% versus Q4 2023.