Hospitals showed resilience over the first four months of the year, even as cost pressures persisted.
Hospitals are continuing to build on early-year momentum, reflecting encouraging trends in performance.
Increased demand for care and improved patient throughput at hospitals in April resulted in a gain in operating margins, according to Kaufman Hall’s latest National Hospital Flash Report, which analyzes data from 1,300 hospitals.
The median year-to-date operating margin for hospitals through April, inclusive of all allocations for the cost of shared services that they receive from their health system, stood at 3.3%, up from 3.1% in March and marking a 6% improvement compared to the same period last year. The monthly margin ticked slightly up from March’s 2.9% to April’s 3%.
“Hospital performance from January to April outpaced the first four months of 2024, largely driven by patient volume and hospital efficiency,” Erik Swanson, managing director and group leader of data and analytics at Kaufman Hall, said in a statement. “Operating room minutes, ED visits, and inpatient revenue are trending upward, demonstrating a strong demand for services. A decline in average length of stay indicates that hospitals are triaging, treating, and discharging patients efficiently and appropriately.”
April saw a bump in patient volumes, continuing a shift that’s been key to hospitals’ financial resiliency in 2025. Discharges per day rose 3% year-over-year, while adjusted discharges per day climbed 5%. On a year-to-date basis, emergency department visits increased 3% compared to the same period in 2024, and operating room minutes per day were up a modest 1%.
One of the most notable improvements came in length of stay, which declined by 3% year-over-year. That reduction is helping hospitals treat more patients more efficiently—critical amid ongoing workforce and capacity challenges.
In terms of revenue, net operating revenue per calendar day jumped 6% in April compared to last year, with outpatient revenue per calendar day leading the way with a 10% rise and inpatient revenue per calendar day also climbing 5%.
Expenses, however, remain a challenge. Total costs per day increased 7% year-over-year, with significant growth in supply (9%), drug (7%), and purchased services (8%) costs. Labor costs also grew by 6%, despite many systems focusing on right-sizing their workforces.
Hospitals also saw a 5% increase in bad debt and charity care compared to last April, adding to the financial pressures.
Though hospitals are finding ways to adapt and volume boosts are helping, the margin for error remains thin.
Jay Asser is the CEO editor for HealthLeaders.
KEY TAKEAWAYS
Hospital operating margins rose to 3.3% year-to-date, up 6% from last year, Kaufman Hall’s National Hospital Flash Report found.
Patient volumes and throughput improved, with shorter stays and higher discharges leading to more efficiency.
Expenses grew 7% year-over-year, led by supply and labor costs, keeping financial strain high despite revenue gains.