Average hospital margins year to date remained steadfast in May at 3.8%, according to Kaufman Hall's "National Hospital Flash Report," released July 9.
"Hospital financial performance remained relatively unchanged during the month of May, and the rate of change slowed for margins and other key performance indicators, which reflects stabilization," wrote Erik Swanson, senior vice president at Kaufman Hall.
The stabilization is a positive sign for hospitals after ending the year with average margins at 1.9%. The average hospital margin shot up in January to 4.6% and then decreased slightly in February and March.
From April to May, the monthly average operating margin index dipped from 4.2% to 3.7%. Operating margins increased 23% year to date over the same period last year.
Average net operating revenue per calendar day increased 7% year over year for the month with inpatient and outpatient revenue both jumping 8%. Operating EBITDA margin was up 3% year over year in May and 15% year to date. Expenses per calendar day increased 6% year over year in May, while labor expenses per calendar day were up 7% and supply expenses jumped 9%.
Kaufman Hall also noted the gap between high and lower performing hospitals continues to widen, with the high performing hospitals more often making longer term strategic investments, according to the report.
"The widening gap between higher-performing and lower-performing hospitals illustrates the need for longer-term strategic investments. Short-term cuts and crisis management will not make for sustainable change,” said Mr. Swanson. “Hospitals should seize this relative moment of calm to focus on enterprise strategic planning in order to achieve long-term success."
For success in the future, the report authors recommended hospitals differentiate from their competitors and define their future direction. They also noted analyzing all aspects of current operations and using data to rework the operating model will help hospitals thrive.