Hospital volumes dipped from February to March as an elevated flu and respiratory season ran its course, nationwide operating data show.
The decline helped hospitals cut down their expenses while per-patient revenues held firm, translating to a slight bump in operating margins, according to the latest monthly report from healthcare advisory firm Kaufman Hall. Still, volumes, expenses, revenues and margins all remain above the same point in 2024.
Kaufman Hall’s single-month median operating margin—when including health system allocations for the cost of shared services—was 3.1% in March, up from February’s 2.7%. Year to date, hospitals’ median operating margin was 3.3%, which remains above the 2024 full-year median of 2.1%.
Excluding health system allocations brought hospitals to a 6.7% single-month median operating margin for March. Calendar year-to-date median margins were 6.9%, just above full-year 2024’s 5.7%.
Daily discharges and adjusted discharges were down 5% and 3% month over month, with the same measures both up 4% from the prior year. Average length of stay was flat. Daily ED visits and operating room minutes were down 5% and 4% from February but up 2% and 1% from March 2024.
As a result of fewer patients, total daily expenses declined 4% from February but are still up 7% from the prior year.
Most of those savings came from nonlabor expenses, which dropped 7% per day from February while labor dipped just 1%. Per adjusted discharge, total expense decreased 1%, nonlabor expense fell 3% and labor expense rose 1% month over month.
On a year-over-year basis, daily nonlabor expenses are up 9% and daily labor expense rose 6%. Total expense per adjusted discharge is 3% higher from last year, split between a 1% rise from labor and a 6% jump from nonlabor.
Daily net operating revenues largely followed the same trend, dropping 4% from February but sitting 9% higher from March 2024. Month-to-month reductions were steeper among inpatient revenues than outpatient. Per adjusted discharge, net patient service revenues were flat from February and up 4% year over year.
While Kaufman Hall said the numbers are evidence of hospitals capitalizing on care delivery efficiencies during the wind-down of respiratory illness season, the firm said they’ll need to do more amid spending headwinds and limited revenue gains.
“Hospitals need to remain vigilant about their expenses, especially as the United States enters a period of economic and policy uncertainty,” Erik Swanson, managing director and data and analytics group leader with Kaufman Hall, said in a release. “With revenue largely flat, finding efficiencies that can reduce expenses is mission critical.”
Kaufman Hall, which is owned by healthcare data and improvement company Vizient, releases monthly reports built on operating data from 1,300 nationwide hospitals, as collected by Strata Decision Technology.
A quarterly report on physician practice trends also released by the firm Thursday underscored a steady rise in the percentage of advanced practice providers (APPs) in practices (40.6%). Kaufman Hall pointed to primary and surgical care as the driver for increasing APPs.
“Advanced practice providers like physician assistants and nurse practitioners play a vital and increasingly visible role in healthcare,” said Matthew Bates, managing director and physician enterprise service line leader with Kaufman Hall. “When deployed correctly, advanced practice providers let physicians practice at the top of their license. They give doctors more time to focus on diagnosis and treatment, which can make physician practices more efficient and address other challenges, including physician burnout.”
The provider report also outlined slow increases in provider compensation and a warning that average physician subsidies’ growth may be outpacing practice margins.