Operating margins improved 1.4% in September over the same month in 2022, continuing a general trend in recent months, but health systems must take action against persistent labor pressures, Kaufman Hall said in two separate reports.
While the October "National Hospital Flash Report" showed a seventh straight positive median operating margin figure and equaled the highest percentage figure of 2023, September volumes were down on August, easing pressure on overall expenses even as labor costs increased.
Health systems and hospitals can take a number of steps for the long-term labor problems, including creating a flexible staffing pool as an alternative to travel contracts. They should also consider advanced predictive modeling to improve staffing plans, Kaufman Hall said.
"While overall expenses seem to be softening as volume decreases, labor costs continue to be a challenge for hospitals and health systems," said Erik Swanson, senior vice president of data and analytics at Kaufman Hall. "Hospitals and health systems need to identify long-term solutions that can address persistent workforce issues."
In its separate October "Physician Flash Report," Kaufman Hall stresses the need for systems to be more strategic about retention of providers and support staff. Physicians may be operating at record-high levels of productivity but are receiving less pay overall.
Labor costs continue to increase overall and as a share of revenue, the report said.