Median hospital margins remained stable to kick off 2025, as many reported higher service volumes and expenses.
Kaufman Hall's "National Hospital Flash Report" revealed January median operating margins hit 4.4%, up from 3.7% in December and 0.6% last January. Without allocations, the median operating margin grew to 8%, a 12-month high. the averages are based on data from more than 1,300 hospitals and gathered by Strata Decision Technology.
"January was a relatively stable month for hospitals, as more people received care due in part to seasonal challenges like flu and other respiratory diseases. Hospitals are also experiencing more rapid revenue growth from inpatient than outpatient services. Expenses are also rising, driven primarily by drug costs, though the rate of cost growth has slowed," said Erik Swanson, managing director and group leader, data and analytics, of Kaufman Hall.
Net operating revenue per calendar day was up 6% year over year while expenses climbed 5%. Hospitals in the Midwest and West regions reported the highest expense growth, at 7%, while hospitals in the Great Plains region reported the smallest expense growth at 3%. Here is a breakdown of year-over-year expense growth:
- Labor expense per calendar day: 4%
- Non-labor expense per calendar day: 6%
- Supply expense per calendar day: 7%
- Drug expense per calendar day: 6%
- Purchased service expense per calendar day: 6%
Month over month, inpatient revenue growth (8%) outpaced outpatient revenue growth (3%), reflecting more surgical and emergency department visits leading to extended stays. The average length of stay was up 2% from December to January. Year-over-year, inpatient revenue increased 7% while outpatient revenue was up 9%.
Here is the regional breakdown of year-over-year financial data:
West
Operating margins: 4%
Net operating revenue per calendar day: 6%
Total expenses per calendar day: 7%
Midwest
Operating margins: 11%
Net operating revenue per calendar day: 4%
Total expenses per calendar day: 7%
South
Operating margins: 11%
Net operating revenue per calendar day: 9%
Total expenses per calendar day: 6%
Northeast / Mid-Atlantic
Operating margins: 1%
Net operating revenue per calendar day: 5%
Total expenses per calendar day: 5%
Great Plains
Operating margins: 23%
Net operating revenue per calendar day: 8%
Total expenses per calendar day: 3%