Hospital operating margins continue to decline in 2022 as labor costs rise, but financial pressures could ease, according to a new report.
The average hospital operating profit margin fell 39% between 2021 and 2022 due to a 9% increase in labor costs, a Kaufman Hall analysis of monthly data from more than 900 hospitals found. However, rising costs slowed and inpatient numbers improved in December, which could signal a more stable financial outlook in early 2023, the analysts said in the report. Here are five takeaways from the data.
- The average hospital operating margin increased 0.2% from November to December, reversing a streak of 11 months of marginal compression.
- Adjusted labor costs per discharge increased by 4% from 2021 to 2022. But that metric fell 1% from November to December, suggesting that hospitals are using less staffing services. contracts and they are operating more efficiently. The number of full-time staff per hospital bed increased by 4% from November to December.
- Hospitals’ ratio of bad debt and charity care to total revenue fell by 8% between 2021 and 2022.
- Adjusted traffic increased 3% from 2021 to 2022, while the average length of stay was unchanged.
- Outpatient revenue grew 8% from 2021 to 2022 and 20% from 2019 to 2022.
