Press Releases Archives - Strata Decision Technology

Higher wages for hospital employees contribute to rising labor costs

CHICAGO – November 14, 2024 – U.S. hospitals have seen a sizable drop in the number of bariatric surgeries in recent years, according to a new report from Strata Decision Technology. 

While rates of bariatric surgeries fluctuate month to month, they have generally declined over the past few years, with monthly rates in both 2023 and 2024 falling below the prior years. For example, the number of bariatric surgeries decreased more than 32% from 3,924 in August 2022 to 2,658 in August 2024, based on the latest data available from a sample of 809 hospitals nationwide. As a proportion of all inpatient encounters, bariatric surgeries dropped from 0.69% in August 2022 to 0.43% in August 2024.

“The general decline in bariatric surgeries coincides with a significant spike in the use of certain medications to help patients with chronic weight management,” said Steve Wasson, chief data and intelligence officer at Strata Decision Technology. “These trends serve as just one example of the dynamics that impact hospitals’ both clinically and financially, as such procedures once contributed positively to hospital margins but are now a drain on hospital resources.”

The general drop in bariatric surgeries corresponds with rising use of semaglutide. Such medications were initially approved to treat Type 2 Diabetes in late 2017. The Food and Drug Administration approved one brand of semaglutide for chronic weight management in adults in June 2021, and expanded approval to those ages 12 and older in December 2022. The number of semaglutide prescriptions filled jumped more than 400% between January 2021 and December 2023, according to an August 2024 JAMA study.

Hospital margins for bariatric surgeries also have declined as volumes of such procedures have declined. The average total cost margin for bariatric surgeries decreased from $1,651.63 per procedure in January 2021 to -$504.83 as of the latest data from June 2024. Total cost margin is the median margin per procedure after accounting for all costs, including both direct patient care and overhead expenses.

Strata’s analysis examined inpatient bariatric surgeries, because such surgeries are done primarily on an inpatient basis. The data show that the number of surgeries tend to spike each year in December and then drop in January, likely due to individuals seeking to use their insurance deductibles before the start of a new year.

Higher wages contribute to rising labor expenses

In a separate analysis, Strata found that hospitals nationwide continue to feel the effects of rising labor and non-labor costs. At a national level, total labor expense increased 5.2% year-over-year (YOY) in September. Increases in the metric varied for hospitals in different regions. Hospitals in the West had the biggest YOY increase at 6.2% from September 2023 to September 2024, while hospitals in the Midwest had the least increase at 4.3% over the same period.

Higher wages are one contributing factor, as hospitals have increased pay to recruit and retain qualified healthcare professionals. Compared to September 2023, the average hourly pay rate for hospital employees nationwide was up 1.6% in September 2024. Using September 2023 as a baseline, hourly hospital pay rates rose for eight of the first nine months of 2024. The biggest increase was in June, when the average hourly rate was up 1.9%, and the only exception was July, when the average hourly rate was unchanged compared to September 2023.

Read the Q3 2024 Strata Performance Trends report to learn more. 

About the Data 

The report uses data from Strata’s StrataSphere^® and Comparative Analytics 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 600 hospitals with StrataJazz^® Decision Support.

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.

Syntellis Social Networks 
LinkedIn: Strata Decision Technology

Media contact: 

Sally Brown, Inkhouse 

[email protected]

Non-labor Expenses Rise with Increases in Purchased Services, Supply, and Drug Expenses

CHICAGO – Oct. 28, 2024 – U.S. health systems saw operating margins decline for a third consecutive month in September, as organizations continued to feel the pressure of high non-labor expenses such as purchased services, supplies, and drugs.

The median year-to-date (YTD) health system operating margin was 1.6% in September, down from 1.9% in August and down from a 12-month high of 2.3% in May and June, according to new data from Strata Decision Technology. At the same time, hospital operating margins inched upward for a second consecutive month. The median YTD operating margin for hospitals nationwide was 5.1% in September, up from 4.9% in August and 4.8% in July.

“While median operating margins appear to be stabilizing for our nation’s hospitals, operating margins for broader health systems declined throughout the third quarter of this year,” said Steve Wasson, chief data and intelligence officer at Strata Decision Technology. “These declines illustrate the broader impacts of persistent high costs as expenses continue to grow across both labor and non-labor categories. Unfortunately, these kinds of sustained increases will likely continue, further pressuring healthcare organizations in the fourth quarter.”

Looking at how hospital margins have changed over time, the median change in hospital operating margin rose 2.1 percentage points from September 2023 to September 2024. For hospitals in different regions, the median year-over-year (YOY) operating margin change ranged from increases of 1.1 percentage point for those in the Northeast/Mid-Atlantic to 3.9 percentage points for hospitals in both the West and Great Plains.

Sizable increases in hospital expenses for purchased services, supplies, and drugs contributed to a 6.3% increase in total non-labor expenses compared to the same month in 2023. Purchased services expense was up 8.8%, supply expense rose 8.6%, and drugs expense increased 6.8% YOY. Total labor expense was up 5.2% and total expense increased 5.9% over the same period.

Hospitals saw some relief month-over-month, however, with total expense down 2.2%, total labor expense down 2.3%, and total non-labor expense down 2.0% from August to September 2024. Expenses increased across both timeframes after adjusting for patient volumes. Total expense per adjusted discharge rose 2.8% YOY and 3.7% month-over-month, labor expense per adjusted discharge was up 1.5% YOY and 3.0% month-over-month, and non-labor expense per adjusted discharge increased 4.3% YOY and 3.7% month-over-month.

Patient demand was mixed in September, decreasing across key metrics month-over-month, but increasing for both inpatient and outpatient volumes YOY. Inpatient admissions had the biggest YOY increase at 3.8%, while outpatient visits rose 3.6% over the same period. Observation visits decreased 1.2% and emergency visits were down 2.9% YOY. From August to September 2024, outpatient visits decreased 5.7% and inpatient admissions were down 4.5%.

Changes in patient volumes over the past year also varied by service line. Infectious disease had the biggest YOY increase at 8.3%, followed by allergy and immunology at 4.0%. The ear, nose, and throat service line had the biggest decrease at 5.1% YOY, followed by breast health, which saw volumes decline 4.3% YOY.

Source: Comparative Analytics 
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 more than 600 hospitals from over 120 health systems with StrataJazz^® Decision Support, as reported in the National Patient and Procedure Volume Tracker^TM.

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.    

Syntellis Social Networks 
LinkedIn: Strata Decision Technology

Media contact: 

Sally Brown, Inkhouse 

[email protected]

Expense Increases Slow Compared to Double-Digit Increases in July

CHICAGO – Sept. 25, 2024 – Performance metrics were mixed for many U.S. healthcare organizations in August, with patient demand stalling as expenses continued to rise, according to new data from Strata Decision Technology.

Health systems nationwide saw operating margins narrow again for the month. The median year-to-date (YTD) health system operating margin dropped from 2.1% in July to 1.9% in August. At the same time, the median YTD operating margin for hospitals rose slightly from 4.8% in July to 4.9%.

“This is the second consecutive month that we’ve seen operating margins tighten for the nation’s health systems,” said Steve Wasson, chief data and intelligence officer at Strata Decision Technology. “As our largest healthcare organizations, these entities already struggle with thin operating margins and feel expense pressures on a magnified scale. While it’s encouraging to see expense increases slow somewhat compared to the concerning spikes in July, they remain on the rise with no signs of stopping.”

Hospital operating margins saw minimal change compared to the prior year, with the median change in hospital operating margin rising just 0.9 percentage point from August 2023 to August 2024. Margin changes varied by region, with hospitals in the Northeast/Mid-Atlantic seeing the biggest decrease at 1.1 percentage point year-over-year (YOY), and hospitals in the South seeing the biggest increase at 1.9 percentage points.

Patient volumes dropped across most key metrics for the month, representing a return to declines seen in June after a rise in patient demand in July. Outpatient visits decreased 0.5%, observation visits were down 4.2%, and emergency visits decreased 4.9% YOY. Inpatient admissions increased for the month at 3.5% YOY. From July to August 2024, inpatient admissions decreased 0.7% but outpatient visits rose slightly, up 0.4%.

Looking at patient volumes across different service lines, infectious disease had the biggest YOY increase at 20.5%, due in part to recent increases in cases of pertussis, COVID-19, and other infectious diseases reported by the Centers for Disease Control and Prevention. Patient volumes were mixed for the nation’s children’s hospitals. From August 2023 to August 2024, inpatient admissions increased 1.4% while outpatient visits decreased 5.4%.

Hospital expense increases eased somewhat compared to double-digit increases in July. Non-labor expenses rose faster than labor expenses for the month, with total non-labor expense up 6.2% YOY and total labor expense up 5.4% YOY. Total expense increased 6.2% from August 2023 to August 2024. Looking at specific non-labor expenses, supply expense was up 5.5% YOY compared to a 16.4% YOY increase in July. Drugs expense increased 4.6% YOY in August versus 17.3% YOY the prior month, and purchased service expense rose 12.0% YOY, the same level as in July.

Hospital revenues continued to rise across most metrics. Gross operating revenue and inpatient revenue both increased 6.1% YOY while outpatient revenue was up 5.6% YOY. By region, increases in gross operating revenue ranged from 4.6% YOY for hospitals in the Northeast/Mid-Atlantic to 7.0% for those in the Midwest.

Read Strata’s Monthly Healthcare Industry Financial Benchmarks to learn more. 

About the Data 

About Strata Decision Technology 

Syntellis Social Networks 
LinkedIn: Strata Decision Technology

Media contact: 

Sally Brown, Inkhouse 

[email protected]

Larger Organizations See Slight Drop in Operating Margins

CHICAGO – August 27, 2024 – Many U.S. healthcare organizations saw revenues and patient volumes grow in July, even as expenses continued to climb, according to new data from Strata Decision Technology.

Hospital and health system operating margins staggered. The median year-to-date (YTD) hospital operating margin decreased slightly from 4.9% in June to 4.8% in July.* For health systems, the median YTD operating margin narrowed from 2.3% in June to 2.1% in July.

“Improvements in patient volumes are a promising sign to start the third quarter, but the decline in hospital and health system operating margins coupled with double-digit growth in non-labor expenses such as drugs and supplies are concerning,” said Steve Wasson, chief data and intelligence officer at Strata Decision Technology. “The industry will not be able to build lasting stability until we rein in rising expenses.”

Hospital expenses continued to grow in July, with non-labor expense increases outpacing labor expense growth. Total hospital non-labor expense jumped 10.8% from July 2023 to July 2024, driven by a 17.3% year-over-year (YOY) increase in drugs expense, a 16.4% YOY rise in supply expense, and a 12% YOY increase in purchased services expense.

Total labor expense rose 5.7% YOY and total expense increased 8.2% YOY. Expenses eased somewhat after adjusting for patient volumes. Total expense per adjusted discharge was down 0.6% YOY and labor expense per adjusted discharge decreased 4.0% YOY, but non-labor expense per adjusted discharge increased 1.9% YOY. 

Higher patient demand contributed to hospital operating margin gains in July. Patient volumes increased for the month after decreasing across most metrics in June. Outpatient visits rose 13.2% and inpatient admissions increased 8.2% from July 2023 to July 2024. Emergency visits and observation visits had minimal increases of 0.4% and 0.9% YOY, respectively. 

At the same time, patient volumes decreased across many service lines and procedures. Breast health had the biggest YOY decrease at 8.7%, according to the latest service line data from June. Looking at 15 common procedure types, inpatient primary knee replacement surgeries had the biggest YOY decrease in patient volumes at 19.3%. Outpatient positron emission tomography (PET) had the only YOY increase, with patient volumes up 3.8%. 

Higher patient demand contributed to gross revenue increases for the month. Gross operating revenue rose 13.9% from July 2023 to July 2024. Outpatient revenue increased 15.9% YOY and inpatient revenue was up 9.1% YOY.

Read Strata’s Monthly Healthcare Industry Financial Benchmarks to learn more. 

*The median YTD hospital operating margin for July represents a correction from a previous version of this press release.

About the Data 

About Strata Decision Technology 

Strata Decision Technology, LLC provides a cloud-based, enterprise performance platform for software, and data and service solutions to help organizations better analyze, plan, and perform in support of their missions. More than 2,300 organizations rely on Strata’s StrataJazz and Axiom solutions for financial analytics, planning, and performance management. Named the market leader for Business Decision Support for more than 15 consecutive years, Strata delivers first-class solutions and service, with an intense focus on accelerating innovation. For more information, please go to www.stratadecision.com.    

Syntellis Social Networks 
LinkedIn: Strata Decision Technology

Media contact: 

Sally Brown, Inkhouse 

[email protected]

###

Patient Volume Declines and Rising Expenses Reflect Ongoing Volatility

CHICAGO – July 25, 2024 – U.S. health systems saw operating margins stabilize at the end of the second quarter, with the median, year-to-date (YTD) health system operating margin holding steady at 2.3% for a second consecutive month in June, according to new data from Strata Decision Technology.

While still narrow, it marks an improvement over median, YTD health system operating margins of less than 1% in the second half of 2023. Individual hospitals also remained on more stable ground throughout the first six months of 2024, ending the second quarter with a median YTD operating margin of 4.9% in June, down slightly from 5.0% in May.

“Hospital and health system operating margins leveled off in recent months, even as expenses rose and patient volumes declined in June,” said Steve Wasson, chief data and intelligence officer at Strata Decision Technology. “While overall financial performance for these critical healthcare organizations has strengthened compared to recent years, they continue to experience significant market volatility.”

As a primary example, patient volumes decreased across most measures in June. Outpatient visits and observation visits both saw the biggest year-over-year (YOY) declines at 4.2%. The declines represent a reversal from YOY volume increases seen in May. The only metric to see an increase was inpatient admissions at 1.4% YOY. Volume declines were more significant month-over-month. Outpatient visits had the steepest drop at 10.2%, followed by emergency visits at 9.5%. Observation visits decreased 6.3% and inpatient admissions were down 5.5% from May to June 2024.

Hospitals continue to feel the weight of high expenses. YOY growth in labor expenses outpaced non-labor expense increases in June. Total labor expense increased 5.2% and total non-labor expense was up 3.3% from June 2023 to June 2024, contributing to a 4.8% increase in total expense over the same period. As with patient volumes, that represents a reversal from the prior month as hospitals saw some of the year’s first decreases in supply and drugs expenses.

Supply expense was down 2% YOY and 7.2% month-over-month in June, marking the first decline in the metric so far in 2024. Drugs expense dropped 5.4% YOY and 10.5% versus May 2024, marking only the second YOY decrease in that metric this year. Hospitals also saw overall expenses ease month-over-month. From May to June 2024, total expense was down 2.8%, total labor expense decreased 3.0%, and total non-labor expense was down 2.7%.

Rising expenses remain a concern for physician practices across the country. The median, total direct expense per physician full-time equivalent (FTE) was $1.08 million for the second quarter. That represents a 16.3% increase from Q2 2023 and a 2.1% increase from the first quarter of this year. By region, increases in the metric from Q2 2023 to Q2 2024 ranged from 13.6% for physician practices in the Midwest to 21.3% for those in the West.

High expenses contributed to ongoing increases in the level of investment needed to support physician practice operations. The median investment per physician FTE was $325,414 for the quarter, up 12.3% from the second quarter of 2023.

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 more than 600 hospitals from more than 120 health systems with StrataJazz^® Decision Support, as reported in the National Patient and Procedure Volume Tracker^TM.

About Strata Decision Technology 

Syntellis Social Networks 
LinkedIn: Strata Decision Technology

Media contact: 

Sally Brown, Inkhouse 

[email protected]

Inpatient admissions see biggest increases as patient volumes rise

CHICAGO – June 26, 2024 – The median year-to-date (YTD) operating margin for U.S. hospitals was 5% in May — a significant improvement over 0.7% in May 2023 — but high drug and supply expenses remain a concern, according to new data from Strata Decision Technology.

The metric was up from 4.7% in April but down slightly from 5.2% in January. Margin changes over time, however, suggest ongoing financial instability for the sector. The median change in operating margin was up just 0.3 percentage point from May 2023 to May 2024 and down 0.9 percentage point from April to May 2024.

High non-labor expenses are one factor contributing to that instability, as hospitals continue to feel the strain of elevated drug and supply expenses. Total drugs expense was up 8.3% and total supply expense increased 8.1% year-over-year (YOY) in May, pushing total non-labor expense up 7.3% over the same period. Total labor expense was up 4.4% YOY and total expense increased 5.7% YOY.

“Hospital operating margin performance remains strong, as organizations see continued growth in both inpatient and outpatient gross revenues,” said Steve Wasson, chief data and intelligence officer at Strata Decision Technology. “At the same time, ongoing expense increases are just one of many challenges facing the industry. Healthcare leaders must stay vigilant as they navigate their organizations through those headwinds.”

Growth in gross hospital revenues continued in May, but slowed somewhat compared to double-digit increases in April. Outpatient revenue again saw the biggest increases, with the metric rising 8% from May 2023 to May 2024. Inpatient revenue was up 6.7% YOY and gross operating revenue increased 7.7% YOY. May marked the 13^th consecutive month of YOY growth for the three metrics. Meanwhile, net patient service revenue (NPSR) per adjusted discharge was nearly flat, up just 0.1% YOY and down 4.3% month-over-month in May.

Patient volumes increased YOY across all metrics for healthcare organizations nationwide. Inpatient admissions had the biggest increase, rising 11.7% versus May 2022 and 6.1% versus May 2023 due in part to January’s expansion of the Two-Midnight Rule to Medicare Advantage patients. From May 2023 to May 2024, outpatient visits rose 3.3%, emergency department visits increased 2.3%, and observation visits rose 0.4%.

Patient volumes also rose across all service lines YOY, according to the latest service line data from April. The growth was a reversal from the previous month, when patient volumes decreased YOY across all but two service lines. The cancer service line had the biggest jump at 15.5% across both inpatient and outpatient volumes from April 2023 to April 2024.

High expenses also continue to pressure physician practices. The median, total direct expense per physician full-time equivalent (FTE) rose to $1.09 million for May annualized. That represents a 12.8% increase from 2023 and a 21.1% jump from 2022. High expenses contributed to double-digit increases in the level of investment needed to support physician practice operations. The median investment per physician FTE was $314,487 for the month (annualized), up 11.2% from 2023 and 17.8% from 2022.

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 645 hospitals from 124 health systems with StrataJazz^® Decision Support, as reported in the National Patient and Procedure Volume Tracker^TM.

About Strata Decision Technology 

Syntellis Social Networks 
LinkedIn: Strata Decision Technology

Media contact: 

Sally Brown, Inkhouse 

[email protected]

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 12^th 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 Tracker^TM.

About Strata Decision Technology 

Syntellis Social Networks 
LinkedIn: Strata Decision Technology

Media contact: 

Sally Brown, Inkhouse 

[email protected]

CHICAGO, May 14, 2024 (GLOBE NEWSWIRE) — Hospitals and health systems nationwide saw a sizable increase in delayed or missing payments in the first quarter, due in part to a recent, large-scale disruption to payment processing services, according to a new report from Strata Decision Technology.

Depending on the size of the hospital, estimated gaps in expected versus actual revenue ranged from 16.5% to 17.9% of payments for the first three months of 2024. The findings are among multiple analyses in the report, which includes data from Strata’s database of more than 1,600 hospitals. The report also examined the projected impacts of expansion of the Two-Midnight Rule, and rapid growth in outpatient surgeries in recent years.

The data on missing payments found that the largest and the smallest hospitals — as defined by annual operating expenses — were the most affected. Given that payments can take many weeks after the date of service to process, the shortfall for the largest U.S. hospitals started at 12.2% for services provided in January and rose to 21.1% by March for an average of 17.9% over the three-month period. The smallest hospitals had an average 17.1% shortfall for the quarter, with the gap swelling from 12% in January to 20.4% by March.

“Our data show that hospitals across the country experienced significant shortfalls in payment volumes in the first quarter that could have ripple effects throughout the year,” said Steve Wasson, chief data and intelligence officer at Strata Decision Technology. “The long-term impacts of this disruption remain to be seen, but we will continue to monitor and report on hospitals’ financial performance in the months ahead.”

Impacts of the Two-Midnight Rule

A separate analysis found that expansion of the Two-Midnight Rule could affect more than 20% of Medicare Advantage encounters in 2024. The rule requires patients to be admitted as an inpatient if the treating clinician determines they require hospital care that extends beyond two midnights. The Centers for Medicare and Medicaid Services (CMS) first implemented the Two-Midnight Rule for Medicare in 2013 and expanded it to include more than 30 million people enrolled in Medicare Advantage plans, effective in January of this year.

An analysis of Medicare Advantage encounters from 2023 — before the rule was expanded — found that 22.3% were held in observation status for two days or more. Expansion of the rule already contributed to higher inpatient volumes in the first quarter. In March, inpatient admissions rose 3.9% year-over-year (YOY) while outpatient admissions decreased 5.1% YOY.

Expansion of Outpatient Surgeries

A third analysis examined changes in the share of surgical procedures performed in outpatient settings. Starting in 2019, CMS removed certain surgical procedures from its inpatient-only list, allowing them to be covered in outpatient surgical centers. As a result, the share of surgical procedures performed in outpatient settings grew from 33.6% in January 2019 to 45% in March 2024. The shift was especially dramatic for certain high-volume procedures. For example, the share of knee replacement surgeries performed on an outpatient basis jumped from 20.1% in January 2019 to 80.7% in March 2024.

Read the Q1 2024 Strata Performance Trends report to learn more.

About the Data

The report uses data from Strata’s StrataSphere^{^®} and Comparative Analytics 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 600 hospitals with StrataJazz^{^®} Decision Support.

About Strata Decision Technology

Strata Social Networks
LinkedIn: Strata Decision Technology
Media contact:
Sally Brown, Inkhouse
[email protected]

Infectious disease patient volumes rose above 2023 levels in March

CHICAGO – April 26, 2024 – U.S. hospitals and health systems showed strong performance throughout the first quarter as organizations benefitted from healthy revenue growth so far in 2024, according to new data from Strata Decision Technology.

The median, year-to-date hospital operating margin was 4.7% in March, as organizations saw an 11^th consecutive month of year-over-year (YOY) increases across gross operating, inpatient, and outpatient revenues. Looking at fluctuations in the metric over time, the median change in operating margin was relatively steady, down just 0.1 percentage point YOY and down 0.3 percentage point month-over-month.

“Hospitals and health systems across the country had promising financial performance in the first quarter, as operating margins appear to have stabilized for the time being,” said Steve Wasson, chief data and intelligence officer at Strata Decision Technology. “At the same time, we saw some notable shifts in key expense, revenue, and volume growth metrics in March. If these changes persist in future months, it could signal that long-running industry trends are switching course.”

Hospital expenses continued to rise across most metrics. Looking back over the past few years, labor expenses spiked due to significant demand during the pandemic, but high inflation caused non-labor expenses to grow at a faster rate starting in late 2022. In March, however, YOY growth in labor expenses again outpaced non-labor expenses for the first time in 18 months, suggesting that the effects of inflation may be easing.

Total labor expense rose 3.5% versus March 2023, while total non-labor expense increased 2% YOY. Total expense was up 2.7% YOY. Supply expense was nearly flat with an increase of just 0.1% compared to the same month last year, while drugs expense decreased 2.8% over the same period — representing a reversal after both metrics saw double-digit YOY growth the month before. Total expense per adjusted discharge rose 2.5% YOY.

Hospitals also saw a shift in revenues as growth in inpatient revenues surpassed outpatient revenue increases for the first time since late 2021, reflecting tremendous growth in outpatient services in recent years. Inpatient revenue rose 3.7% versus March 2023, outpatient revenue was up 2.4% YOY, and overall gross operating revenue increased 3.1% YOY. Net patient service revenue (NPSR) per adjusted discharge rose 2.5% from March 2023 to March 2024.

To further reinforce the change in revenues, hospitals also saw inpatient admissions rise 3.9% YOY while outpatient visits dropped 5.1% YOY for the month. Implementation of the Two-Midnight Rule for Medicare Advantage patients starting in January 2024 by the Centers for Medicare and Medicaid Services (CMS) contributed to the increase in inpatient admissions. The rule limits the number of days those patients can be held in observation status before they must be admitted as inpatients. At the same time, observation visits decreased 4.2% versus March 2023 and emergency department (ED) visits rose 2.6% YOY.

Looking at specific service lines, Infectious Disease had the biggest YOY volume growth in both inpatient and outpatient visits with an increase of 35.6% versus March 2023. Contributing factors likely include higher instances of respiratory syncytial virus (RSV), COVID-19, influenza, and measles. From February to March 2024, however, infectious disease volumes decreased 8.2%.

Read Strata’s Monthly Healthcare Industry Financial Benchmarks to learn more.

About the Data

This report uses data from Axiom™ 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. Axiom 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 619 hospitals from 119 health systems with StrataJazz^® Decision Support, as reported in the National Patient and Procedure Volume Tracker^TM.

About Strata Decision Technology

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LinkedIn: Strata Decision Technology

Media contact:

Sally Brown, Inkhouse

[email protected]

CFO Outlook Survey Reveals a Need for Organizations to Do More with Data

CHICAGO – March 13, 2024 – Despite ongoing expense pressures, leaders at hospitals, health systems, and other healthcare organizations nationwide are optimistic their organizations will build financial health throughout 2024, according to a new report from Strata Decision Technology.

The 2024 CFO Outlook for Healthcare report, which features survey results of more than 100 healthcare finance professionals, found that more than half (52%) ranked their optimism at 4 or 5 on a 5-point scale. Only 1% of respondents said they were not optimistic about their organization’s financial performance.

Financial improvements in 2023 contributed to the increased optimism. December marked a 10^th consecutive month of positive hospital operating margins after the metric was negative throughout 2022 and the first two months of 2023. Fifty-two percent of survey respondents also said they expect to see their organizations’ operating margins improve over the course of the year. Fourteen percent anticipate operating margins will decrease, while 28% said they would be about the same.

“For the first time since the pandemic, healthcare leaders have cause to be optimistic about their organizations’ futures,” said Steve Wasson, chief data and intelligence officer with Strata Decision Technology. “While operating margins were narrow throughout 2023, gains in revenues and margins in the latter part of the year laid the foundation for further stabilization. To continue that momentum, organizations will need to commit to using data and other tools to help them manage performance and navigate market changes in the year ahead.”

High costs remain a concern for many. Survey respondents cited contract labor and employed labor as their biggest unforeseen costs of 2023. For 2024, reining in costs — including high labor and non-labor costs — is a top priority for 55% of healthcare leaders. Other high priorities cited by survey respondents include managing strategic and performance improvement initiatives (51%) and managing service line financial performance (45%). Cost improvements ranked as the area that offers the most opportunity to improve margin, while strategic growth was No. 2 and quality improvements was No. 3.

Healthcare finance leaders gained renewed confidence in their teams’ ability to adapt to change. Ninety-five percent of respondents said they are either very confident or somewhat confident in their teams’ ability to adjust strategies in response to sudden market and business changes, such as a natural disaster or another pandemic. That was up from 89% in the 2023 survey.

Healthcare leaders are increasingly leveraging data to tackle current and future challenges. The survey results show that 95% of organizations use external performance benchmarks to inform organizational decisions. More than a third (36%) use benchmarks to measure financial and operational performance and 30% measure clinical quality outcomes against peer organizations. Just over a quarter (28%) said they measure labor and productivity against peers.

At the same time, more than nine in 10 healthcare finance professionals surveyed (92%) said their organizations should do more to leverage financial and operational data to inform strategic decisions. Only 8% said they did not need to do more.

Strata’s 2024 CFO Outlook for Healthcare report combines the survey findings with year-end financial performance data from more than 1,300 hospitals and health systems and more than 135,000 physicians, including Axiom™ Comparative Analytics and Strata’s All-Payer Claims and StrataSphere data.

About Strata Decision Technology

Syntellis Social Networks
LinkedIn: Syntellis Performance Solutions
Twitter: @Syntellis

Media contact:

Sally Brown, Inkhouse

[email protected]