Health system operating margins dropped slightly in November for the fourth month in a row, according to data from Strata Decision Technology.
"Our data reflect mounting financial pressures for hospitals and health systems as they neared the end of 2024," said Steve Wasson, chief data and intelligence officer at Strata Decision Technology. "The persistent margin decreases for health systems throughout much of the second half of the year are particularly concerning. December’s data will provide greater clarity as to whether these pressures will continue into 2025, but the outlook at this point is not encouraging."
Five things to know:
1. Median year-to-date operating margins dropped to 1.7% in November from 1.8% in October. Year-to-date hospital operating margins also dropped to 4.7% in November from 4.9% the previous month.
2. High expenses with low patient demand pressured hospital and health system margins. Total expenses were up 4.7% year over year in November, with purchased services increasing 8.2%. Labor expenses were up 5.4% year over year.
3. Emergency room visits dropped by 7.6% year over year and observation days were down 3.5% in November. Outpatient visits decreased 0.6% and inpatient admissions dropped 0.3% year over year. However, the month-over-month drop was sharper, at 13.5% for outpatient visits and 6.6% for inpatient admissions.
4. Gross hospital revenue jumped 3.9% despite volume decreases. Outpatient revenue was up 4.5% and inpatient revenue rose 2.8% year over year. But month over month, outpatient revenues were down 10.1% and inpatient revenue dropped 6% in November.
5. Fourteen of the 15 most common procedure types increased year over year in October, including a 21.9% increase in positron emission tomography. Inpatient primary hip replacements dropped 0.5% and inpatient primary knee replacements dropped 12.9% as more surgeries went outpatient.