Hospital finances improved slightly in March as hospital leaders navigate high expenses and economic pressures. While margins continue to stabilize, they remain below pre-pandemic levels—leaving hospitals in a vulnerable position should a recession or new public health emergency arise.

In conversations with hospitals and health system leadership across the U.S., most management teams express the same goal: get back to breakeven. For many, the road to breakeven will be bumpy with gains and setbacks along the way.

Hospital finances are beginning to stabilize as razor thin margins become the new normal. The high level of variance that plagued hospital margins over the past three years is beginning to subside among pricing and inflationary pressures affecting expenses.

Hospitals entered 2023 on more stable footing, following the worst financial year since the start of the pandemic. However, they still face a range of persistent challenges, including higher labor expenses, lower patient volumes, and a fundamental shift in where patients access care services.

America's providers are more productive and seeing more patients than ever—particularly in primary care settings—resulting in an increase in revenue in the last quarter of 2022. However, increased expenses outweighed improved revenue.

Last year was the worst financial year for hospitals and health systems since the start of the COVID-19 pandemic, according to the latest data from Kaufman Hall.

Since the start of the COVID 19 pandemic in March 2020, Texas hospitals and health systems have taken unprecedented steps to care for their communities amid intense pressure on staff and resources.

Hospitals experienced a slight increase in operating margins in November 2022—though margins remained negative for 2022 to date—according to the latest National Hospital Flash Report from Kaufman Hall.