Where hospital profitability is trending up

Hospitals have had a rough year financially, but things may be looking up.

The "Kaufman Hall Hospital Flash Report" released in early October showed operating margins overall were up 8% for hospitals nationally year over year in August, and rocketed 17 percent for the first eight months of the year compared to the same period in 2022. EBIDA also improved 10% year-to-date in August compared to the previous year.

But not every region experienced the same success.

The South and Northeast / Mid-Atlantic had the biggest operating margin jumps, at 20% year over year in August. The Western region trailed at 8% operating margin growth year over year for the month, followed by the Great Plains region at 7 percent.

Hospitals in the Midwest fared the worst, with flat operating margins from August 2022 to 2023. However, compared with the month prior, hospitals in the Midwest had the largest operating margin jump of any region at 41%.

Hospitals in the South experienced the greatest EBIDA improvement, at 22 percent growth from August 2022 to 2023, followed by the Northeast / Mid-Atlantic and Great Plains regions.

Large for-profit health systems are also showing signs of improved profitability, regardless of the region. Dallas-based Tenet Healthcare reported 11.9% operating margin and income of $604 million. HCA Healthcare, based in Nashville, Tenn., reported 11.4 percent operating margin and $1.8 billion income. King of Prussia, Pa.-based Universal Health Services reported an 8 percent operating margin and $280.1 million income for the second quarter.

Nonprofit health systems are still struggling with profitability.

For the fiscal year ending on June 30, Chicago-based CommonSpirit, which has 142 hospitals, reported -3.9% operating margin and $1.4 billion operating loss. St. Louis-based Ascension, which has 140-hospitals, reported -5.6% recurring operating margin for the year end and $1.6 billion loss from recurring operations. Renton, Wash.-based Providence reported the operating margin for the first half of the year ending on June 30 was -3.9%, which is better than the -7.3% operating margin reported in the same period last year.

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