Hospitals To End Year With Negative Margins, Kaufman Hall Reports

December 1, 2022

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Source: Healthcare Dive, by Hailey Mensik

Dive Brief:

  • * Heightened expenses, ongoing staffing shortages and fewer patient discharges have hospitals facing negative margins near the end of the year, according to Kaufman Hall’s monthly national flash report out Wednesday.
  • * Median operating margins have been in the red for 10 consecutive months and were down 2% in October from September. Median operating margins were down 13% year over year in October, according to the report.
  • * Total labor expenses rose 3% from September and total expenses rose 1%, while supply and drug expenses did fall slightly during the month.

Dive Insight:

Ongoing staffing shortages are a key contributor to the heightened expenses facing hospitals today, according to Kaufman Hall’s report. Hospital expenses again rose slightly in October, outpacing revenues.

“With the labor market in the healthcare sector still highly competitive, hospitals are feeling the financial pressure of needing to attract and retain workers with significant increases in salaries,” Erik Swanson, Kaufman Hall’s senior vice president of data and analytics, said in a release.

Persistent staffing shortages are also resulting in challenges discharging patients, leading to longer lengths of stay. Adjusted discharges fell 1% in October and average length of stay increased 3%, according to the report.

“Every aspect of patient care — from being admitted, to treatment, to discharge — is affected by the labor shortage and as we head into the virus season and potential new waves of COVID-19 the pressures on hospitals and their staff could mount,” Swanson said.

Emergency department visits rose 3% in October and operating room minutes rose 2%. That contributed to a 2% increase in gross operating revenue, according to the report.

Higher emergency department volumes could further strain the nation’s healthcare workforce, though, the report said.

The American College of Emergency Physicians and 30 other healthcare associations recently asked President Joe Biden to help find solutions to overcrowded hospital emergency rooms, lamenting in their letter that “boarding has become its own public health emergency,” as many departments lack the necessary staff and beds to tend to influxes of patients.

 

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