U.S. Hospitals See Financial Performance Stabilize Throughout 2024, According to New Strata Data
Hospital and Health System Operating Margins Ended the Year on an Upswing
CHICAGO – Jan. 28, 2025 – Operating margins for the nation’s hospitals and health systems largely stabilized in 2024 after years of volatility, according to new data from Strata Decision Technology.
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. While the median YTD operating margin for health systems saw some declines in recent months, it held above 1.5% throughout the year and rose to 2.1% in December.
“2024 was a year of recovery for many healthcare organizations as they regained some financial stability after years of grappling with the repercussions of the pandemic and other economic uncertainties,” said Steve Wasson, chief data and intelligence officer at Strata Decision Technology. “While cost pressures continue to rise, stronger margins and revenues are opening the door to new optimism for 2025. Healthcare leaders at last have some capacity to focus on new investments to grow and diversify their organizations.”
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 earnings before interest, taxes, depreciation, and amortization (EBITDA) margin was up 1.2 percentage points over the same period.
At the same time, hospitals continued to contend with rising expenses. While costs 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.
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 just discharge increased 1.9% from 2023 to 2024.
Patient demand increased across most metrics to close the year in December, with outpatient visits seeing the biggest growth. Outpatient visits were up 6.3% year-over-year (YOY), inpatient admissions rose 4.5% YOY, and observation visits increased 2.1% YOY. Emergency visits decreased slightly at 0.9% YOY.
Patient volumes varied across different service lines, according to the latest service line 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%, reflecting the ongoing shift of such procedures to outpatient settings.
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. Inpatient revenue was up 4.7% YOY and gross operating revenue increased 8.5% 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, further reinforcing continued growth in patient demand for more convenient and lower cost outpatient services.
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 more than 650 hospitals from over 120 health systems with StrataJazz® Decision Support, as reported in the National Patient and Procedure Volume TrackerTM.
About Strata Decision Technology
Strata Decision Technology, LLC provides an innovative, cloud-based platform for software, and data and service solutions to help healthcare organizations acquire insights, accelerate decisions, and enhance performance in support of their missions. More than 2,300 organizations rely on Strata’s StrataJazz and Axiom solutions for market-leading service and enterprise performance management software, data, and intelligence solutions. To learn more about Strata and why the company has been named the market leader for Business Decision Support for more than 15 consecutive years, please go to www.stratadecision.com.
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