The hospital’s financial performance improved in the first four months of the year, underperforming the same period in 2024, according to research released this week by Kaufman Hall.
The consulting firm analyzed data from 1,300 hospitals across the country. The report found that from January to April, the average operating margin for hospitals was 3.3%, up from 1.4% in May last year.
The report said that in the first four months of the year, the hospital’s financial improvement was due to increased patient volume and more effective patient throughput. Emissions per calendar day increased by 3% year-on-year, with an average residence time down 3%.
Overall, Kaufman Hall managing director Brian Pisarsky pointed out that hospitals are increasingly serious in addressing patient transfer and discharge.
“The quantity is great, but how do we improve the throughput side of it to adapt to the quantity? This has been a challenge for many organizations,” he declared.
For many hospitals, the emergency department remains a major issue. Pissaki said he regularly talks with hospitals with 25-75 patients in the emergency room every day, waiting for hospital beds, even in large facilities with more than 1,000 beds.
But as hospitals take steps to address the problem, success stories begin to emerge. Pisarsky explained that there is no silver bullet that can solve the throughput challenges of the health system, but hospitals are leveraging various strategies to manage patient traffic and hospital stays.
For example, they put case managers in the emergency room and create observation units managed by the emergency department to avoid sending upstairs patients upstairs, which helps reduce hospital stays. Pissaki said health care workers are also conducting multidisciplinary rounds and are increasing cooperation among departments such as emergency situations, inpatient units, surgical and transfer centers.
“We have a client who has shortened their stay so much that they have actually closed a unit in the facility. Their number is up 10% from last year, but their length of stay is reduced enough to do that, and they are managing patients more and more quickly. So it does work.”
Erik Swanson, another managing partner at Kaufman Hall, added that while hospital margins are stable now, it is important to remember that they are still fragile – non-labor costs are the next major headwind.
Labor cost growth is slowing, but non-labor costs have increased by 8% in the first four months of the year compared to the same period last year. Swanson said supply chain disruptions and rising commodity costs will be more pressing financial challenges as the year continues.
Photo: Sorbetto, Getty Images
