Decline in Flu Cases Causes Hospitals' Patient Volumes to Dip

Delivering care was less expensive in March, Kaufman Hall's National Hospital Flash Report shows.

With flu season winding down, hospitals are treating fewer patients with respiratory illnesses.

In March, hospitals and health systems across the U.S. experienced a drop in volume stemming from fewer flu cases, which led to a decline in the cost of delivering care while revenue remained flat, according to the latest National Hospital Flash Report by Kaufman Hall.

Dischargers per calendar day and adjusted daily discharges were down 5% and 4% month-over-month, respectively, with equivalent patient days per calendar day also dropping by 4%. Operating room minutes per calendar day fell by 4% and average length of stay was flat.

As a result, total expense per calendar day dipped by 4% compared to February, driven by non-labor expense per calendar day plunging by 7%. Labor expense per calendar day, meanwhile, saw a modest drop by 1%.

Despite the monthly decline in total daily expenses, costs are still up 7% compared to March 2024, due in large part to supply and drugs expenses per calendar day each being up 11% year-over-year.

On the revenue side, net patient services revenue per adjusted discharged and per adjusted patient day were flat month-over-month. Net operating revenue per calendar day declined by 4%, with daily inpatient revenue falling by 5% and daily outpatient revenue dropping by 3%.

Overall, hospitals' median operating margin, inclusive of all allocations for the cost of shared services that they receive from their health system, was 3.1% in March, compared to 2.7% in February. Without allocations, March hit 6.7%, following February's mark of 6.3%.

The year-to-date median operating margin with allocations ticked up from 3.2% in February to 3.3% in March. Without allocations, that figure also saw a slight bump from 6.8% in February to 6.9% in March.

Going forward for the rest of the year, hospitals should continue to look for ways to capitalize on efficiencies in a challenging financial climate, Kaufman Hall noted.

"Hospitals need to remain vigilant about their expenses, especially as the United States enters a period of economic and policy uncertainty," Erik Swanson, managing director and data and analytics group leader with Kaufman Hall, said in a statement. "With revenue largely flat, finding efficiencies that can reduce expenses is mission critical."