Patient Volume and Revenue Decline in July, Challenging Hospitals' Performance
Operating margins for hospitals show improvement compared to 2022
CHICAGO – August 28TH, 2023 – Hospitals’ financial performance worsened in July compared to the previous month, with volume decreasing and bad debt and charity care on the rise, according to the latest National Hospital Flash Report from Kaufman Hall.
Volumes Down, Median CYTD Operating Margin Remains Positive
The median calendar year-to-date (CYTD) operating margin index for hospitals was 1.3% in July, down slightly from 1.4% in June. Adjusted discharges per calendar day decreased 7% from the previous month. Lower patient volume led to a decline in expenses, but not enough to offset revenue losses.
Process Improvement Essential Amid Financial Challenges
The data show a greater pullback in volume on the outpatient side, which may be attributed to patients choosing not to pursue elective procedures during the summer. Hospitals and patients are continuing to feel the effects of Medicaid eligibility redeterminations, as more than 30 states disqualified previous enrollees in June and July.
“It’s clear that today’s challenging financial environment is here to stay, and hospital leaders must be proactive in seeking out opportunities to refine their operations and remain competitive,” said Erik Swanson, senior vice president of Data and Analytics with Kaufman Hall. “Collecting good data and feedback is essential for making timely, evidence-based process improvements.”
Prioritizing Patient Care Transitions for Success
Hospitals have struggled to transition patients to post-acute care settings due to lack of space in many facilities. Developing ongoing relationships with local nursing homes to establish a clear pathway for discharge can reduce patients’ length of stay and get them the care they need afterward.
“Hospitals that prioritize care transitions are performing better than institutions who do not,” said Swanson. “Identifying steps that can ensure a smooth transition, such as obtaining prompt pre-authorizations and planning discharge early, will help organizations reduce expenses and improve patients’ experience.”
The National Hospital Flash Report draws on data from more than 1,300 hospitals from Syntellis Performance Solutions.
About Kaufman Hall
Kaufman Hall provides management consulting solutions to help society’s foundational institutions realize sustained success amid changing market conditions. Since 1985, Kaufman Hall has been a trusted advisor to boards and executive management teams, helping them incorporate proven methods, rigorous analytics, and industry-leading solutions into their strategic planning and financial management processes, with a focus on achieving their most challenging goals.
Kaufman Hall services use a rigorous, disciplined, and structured approach that is based on the principles of corporate finance. The breadth and integration of Kaufman Hall advisory services are unparalleled, encompassing strategy; financial and capital planning; performance improvement; treasury and capital markets management; mergers, acquisitions, partnerships, and joint ventures; and real estate.
Kaufman Hall companies include Claro Healthcare and Gist Healthcare.
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