July was another month of operational stability and moderating expenses for hospitals, new industry data show.
In its most recent monthly report, advisory firm Kaufman Hall outlined “improvements across the board, especially in outpatient revenue and shorter average length of stay,” Erik Swanson, the group’s senior vice president of data and analytics, said in a statement.
Specifically, July’s outpatient revenue per calendar day was up 4% over June and increased 17% year over year, according to the report. Average length of stay was down 2% from June and 3% year over year—a key factor toward declines in total expense per discharge of 2% (month over month) and 1% (year over year).
“Notably, the reduction in average length of stay has also led to significant decreases in expenses, further bolstering hospital performance,” Swanson said.
At a higher level, Kaufman Hall’s index of calendar year-to-date operating margins was 4.1%, while single-month operating margins rose from 3.3% in June to 3.8% in July.
Calendar year-to-date operating margins have so far stayed north of 4% after spending much of 2023 in the 2% to 3% range, leading Swanson to declare “the theme of 2024 has been stability.”
Hospitals’ net operating revenue per calendar day was down 1% from June but up a strong 15% over July 2023. Though not reaching the gains of outpatient revenues, daily inpatient revenue still improved 2% from June and 9% year over year. Net patient service revenue per adjusted discharge and per adjusted patient day were both down 1% from June but are up from the prior year.
2024’s strong hospital volumes continued through July. Daily discharges rose 1% from June and 6% year over year, while adjusted discharges grew 1% from June and 9% from the prior year. ED visits and, to a greater extent, operating room minutes also improved.
Hospitals’ total expenses per calendar day fell 1% from the prior month but are 8% higher than last year, largely reflecting the year-to-year volume growth.
Hospitals checked their daily labor expense with a 1% decline from June and a modest 6% growth from July 2023, though drug spending continues to weigh down the expense sheet with a 6% increase from June and an 18% rise from July 2023. Per adjusted discharge, July’s labor expenses were 4% lower than 2023, while its drug expenses were 6% higher.
The latest release largely signals good news for the hospital industry, though Swanson warned that “while overall hospital performance has been strong, the financial performance of health systems has been trending lower than hospitals alone.”
Kaufman Hall’s monthly reports are built on data from 1,300 hospitals nationwide collected by Syntellis Performance Solutions.
Another monthly report released last week by Syntellis parent company Strata similarly outlined surging demand and rising nonlabor expenses. It also noted median year-to-date operating margins for hospitals was nearly triple that of health systems.