The latest data from Kaufman Hall's National Hospital Flash report reveals holiday-related volume declines and rising volume-adjusted expenses weighing on margins.
Hospital financial performance softened in November as volumes fell and expense pressures intensified, according to Kaufman Hall’s latest National Hospital Flash Report.
The report, based on data from more than 1,300 hospitals nationwide, shows that while revenues, volumes, and margins continue to outperform historical benchmarks on a year-to-date basis, month-over-month declines highlight how connected finances are to patient activity.
“While month-to-month hospital performance softened in November, on a year-to-date basis, revenue and margins are still strong compared to previous years,” Erik Swanson, managing director and data and analytics group leader at Kaufman Hall, said in a statement. “The continued rise in expenses requires attention. For hospital leaders, managing overall spend as patient volumes fluctuate is an ongoing challenge.”
The median hospital operating margin for November, including all allocations for the cost of shared services received from health systems, fell to 0.4%, down from 1.9% in October.
Despite the month-over-month drop, margins remain positive on a calendar-year-to-date basis, with the operating margin index, including allocations, standing at 2% in November.
Revenue trends also weakened in the month. On a month-to-month basis, net operating revenue per calendar day fell 6%, inpatient revenue declined by 4%, and outpatient revenue saw a steeper drop of 9%.
Volume declines were across the board in November, affecting inpatient, outpatient, and emergency services alike. Kaufman Hall noted that some of the drop likely reflects seasonal factors, including the impact of November holidays, which tend to reduce elective surgeries and procedures.
Discharges per calendar day declined 3% from October, while daily adjusted discharges fell by 7%. Emergency department activity also slowed, with daily ED visits down 5% month-over-month. Surgical activity saw one of the biggest declines, as daily operating room minutes dropped 11% compared to October.
Though revenues and volumes declined in November, expenses did not adjust at the same pace. Total expense per calendar day fell 2% month-over-month, but on a volume-adjusted basis, expenses continued to rise.
As hospitals navigate seasonal fluctuations and ongoing expense pressures, Kaufman Hall’s data suggests that leaders’ ability to manage costs while responding to uneven demand across service lines will be vital for sustainable financial performance.
Jay Asser is the CEO editor for HealthLeaders.
KEY TAKEAWAYS
The median hospital operating margin fell to 0.4% in November, compared to 1.9% in October, though the calendar-year-to-date margin index remained positive at 2%.
Inpatient, outpatient, emergency, and surgical activity all fell in November, likely reflecting seasonal holiday impacts and fewer elective procedures.
While total expenses per calendar day declined modestly, costs rose on a volume-adjusted basis, indicating ongoing challenges in aligning spending with fluctuating demand.