Hospital revenues appear to be on the upswing as more patients receive care — which is welcome news for the hospital industry and not-so-great for insurers.
Why it matters: Hospitals have been warning for months that their financial stability is threatened by inflation, labor costs and other factors in the wake of the pandemic, which could ultimately threaten patient care.
Driving the news: In response to a Cowen survey, more than 300 non-profit hospitals reported a 7.5% year-to-year revenue growth in May, a sharp acceleration above April’s 3.5% growth rate and a 4.7% growth rate in the first quarter.
- “Most of this acceleration is clearly happening on the outpatient side,” Cowen analysts wrote in a note.
- On Tuesday evening, UnitedHealth Group said costs are rising as more older adults are receiving outpatient care, including hip and knee procedures, causing insurer stocks to tumble yesterday, per Reuters.
Between the lines: This may just be the beginning of hospital spending increases.
- Although the recent spikes appear to largely be due to pent-up demand, the delayed impact of economy-wide inflation — which takes awhile to trickle through the health system — could continue to drive prices upward as providers renegotiate contracts with insurers.
What we’re watching: Hospitals’ revenue problems have provided the industry with a timely reason to rail against congressional efforts to reform how Medicare reimburses them.
- But if data continues to show that hospitals’ financial fortunes have reversed, that could bolster lawmakers’ resolve to pass reforms.