The health system has significantly grown its finances thanks in large part to an increase in demand for services.
Through the first six months of 2024, Advocate Health blew past the financial markers it set in its inaugural year.
The North Carolina-based health system, one of the largest nonprofit operators in the country, is benefiting from the improved patient volume and utilization many providers are experiencing across the country.
In Advocate’s case, the result was $449.8 million in operating income (2.7% margin) in the first half of the year, dwarfing the $85.7 million (0.6% margin) it reported in the same period in 2023.
Revenue jumped 9.5% year over year to $16.7 billion, contributing to a net gain of $1.3 billion through June, compared to net income of $997.9 million over the same period last year.
Driving that revenue has been volume gains nearly across the board. Inpatient and outpatient surgeries increased 1.9% and 1.4%, respectively, while emergency department visits grew 6%. Discharges also rose 8.2% and inpatient length of stay decreased by 2%. Observation cases were the lone weak point, falling by 9.0%.
Advocate’s revenue outpaced the increase in expenses, which grew by 7.5% to $16.2 billion.
Source of relief
It isn’t just Advocate that’s been happy to see the demand for services go up.
In an analysis of more than 1,600 hospitals and 135,000 providers in the U.S. for July, Strata found that inpatient admissions rose 8.2% and outpatient visits increased 13.2% year over year. Those figures resulted in 8.2% more inpatient revenue and 15.9% more outpatient revenue over that same period.
Growth in volume is coming at a much-needed time for hospitals as expenses continue to balloon. Non-labor expenses swelled by 10.8% year over year, including an increase of 17.3% in drugs costs and a 16.4% rise in supply costs.
Labor expenses, meanwhile, jumped 5.7% year over year as total expenses increased 8.2% from July 2023.
Improved volume is allowing many hospitals to stay ahead of inflating costs, but that’s likely not the case for smaller facilities in rural regions.
Large health systems, however, are reporting healthier bottom lines the further out the industry gets from the pandemic.
Jay Asser is the CEO editor for HealthLeaders.
KEY TAKEAWAYS
Advocate Health grew its operating income for the first half of the year to $449.8 million, which was more than five times what it posted over the same period in 2023.
The hospital operator’s revenue was spurred by a jump in patient volume, including inpatient surgeries rising 1.9%, outpatient surgeries growing 1.4%, and emergency department visits increasing 6%.
Demand for services at hospitals across the country has recently grown, helping organizations offset rising expenses.