Kaufman Hall's latest look at hospital finances shows that the average operating margin ticked up in October.
Shifting care to outpatient settings is helping hospitals find stable financial footing.
The average monthly operating margin for hospitals jumped 6.2% in October, pushing the year-to-date margin to 4.4%, as outpatient revenue remained on the rise, according to Kaufman Hall's National Hospital Flash Report.
Outpatient revenue per calendar day increased 7% month over month and 13% over the same period in 2023, outpacing inpatient revenue's bump of 1% and 6%, respectively.
Average length of stay also trended positively, declining 3% from September and by 4% compared to October 2023.
Meanwhile, adjusted discharges per calendar day climbed 5% from the previous month and 7% year over year, contributing to a decrease in overall expenses on a volume adjusted basis, the report stated.
Still, hospitals are dealing with ballooning supply and drug costs that are putting pressure on the bottom line.
For October, supply expense per calendar day increased by 8% versus September and by 13% versus October 2023, whereas drugs expense per calendar day shot up 7% and 15%, respectively.
Though labor expenses have been a challenge for providers since the pandemic, hospitals are getting better at balancing those costs, evidenced by a modest 1% rise in labor expense per calendar day in October.
"Hospitals continue to experience overall financial and operational stability," Erik Swanson, Kaufman Hall senior vice president and data analytics group leader, said in a statement. "However, supplies and drug expenses continue to put pressure on hospitals, and cost containment should be a priority. Continued growth in outpatient revenue and reductions in the average length of stay indicate that patient care is shifting to more ambulatory and outpatient care sites."
The National Hospital Flash Reports uses data from more than 1,300 hospitals on a recurring monthly basis from Syntellis Performance Solutions, now part of Strata.
Jay Asser is the CEO editor for HealthLeaders.
KEY TAKEAWAYS
Hospitals, despite battling swelling supply and drug expenses, experienced a 6.5% increase in average operating margin in October, Kaufman Hall's National Hospital Flash Report reveals.
Outpatient revenue is providing hospitals some relief, improving 7% from the previous month and 13% year over year, along with the average length of stay falling.