Hospitals have a strong month as volumes return to normal

Hospitals are seeing care patterns return to normal, with average length of stay and emergency department visits stabilizing in April 2024, according to the latest “National Hospital Flash Report” from Kaufman Hall.

The report analyzing data from more than 1,300 hospitals from Syntellis Performance Solutions showed a decrease in the average lengths of stay in April. Experts at the healthcare consulting firm suggest this signals a “return to normal care patterns and the establishment of stronger post-acute care transitions.”

Additionally, outpatient revenue and operating room minutes increased in April, the report noted. Net operating revenue per calendar day also grew by 5% month-over-month and 13% year-over-year, helping to put hospitals in a better position compared to three years ago (21% increase in year-to-date versus 2021).

However, emergency department visits also increased and went back to pre-2020 levels. The data showed a 6% increase month-over-month, a 10% increase year-over-year, and a 6% increase compared to the year-to-date in 2021. Experts said this growth in emergency department visits could be “putting additional pressure on hospitals and health systems” despite growth in volumes and revenues elsewhere.

Expenses are also still up for hospitals and health systems, with a 3% month-over-month increase in total expenses per calendar day. The metric also increased by 7% year-over-year and 18% compared to the year-to-date in 2021. In particular, labor expenses per calendar year rose by 1% month-over-month and 4% year-over-year, while non-labor expenses per calendar year increased by 5% and 11%, respectively.

Together, key performance metrics indicate a strong April for hospitals. Revenue and operating margins rose in April relative to March and the same time frame last year, according to the report. Kaufman Hall also calculated a median calendar-year-to-date operating margin index of 3.8% in April, showing a slight improvement from March’s 3.6%.

The operating margin index determined by Kaufman Hall was not as strong as earlier this year, though, when it was 4.1% in February and 4.6% in January.

Hospital margin growth has slowed in the last couple of months, but this could indicate a new normal for hospitals and health systems, Erik Swanson, senior vice president of data analytics at Kaufman Hall, said in the report.

Swanson also pointed out a growing divide between higher-performing and lower-performing hospitals.

“While financial performance looks solid on the surface, a closer examination of the data shows a greater divide between high- and low-performing hospitals. Forty percent of hospitals in the United States are losing money,” Swanson explained in a statement. “Organizations who have weathered the challenges of the last few years have adopted a wide range of proactive and growth-related strategies, including improving discharge transitions and a building a larger outpatient footprint.”