U.S. hospitals are expecting moderate year-over-year gains as the calendar year winds down despite anticipating significant month-over-month decreases in their margins, according to a new report from Kaufman Hall.
According to the consulting firm's National Hospital Flash Report for November, operating margins are expected to fall more than 14% month over month in December but will increase 3.7% year over year.
Hospitals in the Midwest are expecting the biggest gains while hospitals in the west are projecting significant decreases. Meanwhile, those hospitals with between 200 and 299 beds are expected to fare the best, with a month-over-month increase of 3% and a year-over-year increase of 9% compared to anticipated drop of up to 11% for hospitals with between 300 and 499 beds.
A look at October
October was a good financial month for U.S. hospitals largely attributed to increased volumes, modest revenue gains, lower bad debt and charity care, according to the report.
Operating performance improved and month-over-month performance showed significant gains, according to the look at metrics for more than 800 hospitals. They cited increased volumes, modest revenue gains, lower bad debt and charity care for the improvement.
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- Volume: Performance was mixed in October but largely improved across the different metrics, officials said. For instance, discharges rose 1.5% year over year and 4.8% month over month in October. Adjusted discharges increased 2.9% year over year and 6.3% month over month. Adjusted patient days increased 3.5% year over year and 5.1% month over month.
- Revenue: Hospitals reported modest gains with decreases in bad debt and charity care. For instance, net patient service revenue per adjusted patient discharge rose 1.5% year over year and 1.2% month over month.
- Expenses: Hospitals saw labor expenses drop 1.8% year over year and 3.1% month over month. Meanwhile, non-labor expenses were up 1.4% year over year and were 1.8% higher month over month.
Still, the report said, despite some gains in certain metrics, trends in both volumes and revenues indicate a sustained instability being experienced by healthcare providers.
"Despite some year-over-year gains in select metrics, these trends in both volumes and revenues clearly indicate the sustained instability being experienced by the nation's legacy healthcare providers," Kaufman Hall Managing Director Jim Blake said in the report.
"Fluctuating revenues, volumes, and the migration of care to outpatients settings are just some of the factors placing immense pressures on organizations seeking to adjust to a changing business model," he said.