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Hospital Expenses Continue to Rise as Operating Margins Hold Steady

Analysis  |  By Jay Asser  
   June 15, 2023

A new report shows hospital operating margins have stabilized even as expenses show no signs of slowing down.

Hospitals managed to stay afloat in April in the face of ongoing expense increases and a rise in total bad debt and charity care, a report by Syntellis Performance Solutions revealed.

The monthly Syntellis Performance Trends Healthcare report uses data drawn from 135,000 physicians from over 10,000 practices and 139 speciality categories, as well as from 500-plus unique departments across more than 1,300 hospitals.

In April, median hospital operating margins remained just above zero at 0.4% for the second consecutive month after 15 months of negative margins.

Meanwhile, it was also the 12th month of year-over-year increases in total expense and total non-labor expense, which increased 2.2% and 3.7%, respectively. Total labor expenses experienced a 1.1% year-over-year rise in April, making it 11 of the past 12 months of year-over-year increases.

"While a steadying of hospital operating margins is a positive sign, our nation's hospitals and health systems remain on dangerously thin ice with extremely narrow operating margins," Steve Wasson, executive vice president and general manager for Data and Intelligence Solutions at Syntellis, said in a press release.

"Healthcare leaders are finding ways to meet evolving patient needs and grow revenues, but relentless expense increases and other economic and industry challenges threaten to plunge them back into the red at any time."

High expenses were driven in part by labor expenses for nurses, which worsened as the industry continues to feel the effects of nursing shortages. Compared to April 2021, the nursing labor expense per patient rose 17.6%.

Additionally, hospitals dealt with bad debt and charity care, which was up 15% year-over-year and 7.6% month-over-month. Those figures may worsen in the coming months as millions are expected to lose Medicaid coverage as states roll back COVID-19 pandemic provisions.

Kaufman Hall's most recent National Hospital Flash Report also highlighted increases in bad debt and charity care in April due to the widespread disenrollment.

Jay Asser is the contributing editor for strategy at HealthLeaders. 


The Syntellis Performance Trends Healthcare report for April found that the median hospital operating margins remained at 0.4% for the second consecutive month.

Total expense and total non-labor expense increased to 2.2% and 3.7%, respectively, while total labor expense experienced a 1.1% year-over-year.

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