A recently published National Hospital Flash Report from Kaufman Hall found that median hospital margins remained negative for 2022. The report was published on January 4, 2023, and tracked data up to December 2022.
According to the report, hospital margins hit a low of -3.4% in January 2022 but steadily increased over the year to a high of -0.2% in November. The report stated that “significant increases in the cost of labor made it harder for hospitals to see positive margins in 2022.”
Year-over-year numbers highlight the financial woes even further. Nationally, hospital profitability was down 32% and margins were down 27% compared to 2021. However, Kaufman found that the average net operating revenue was up 3% in 2022 compared with the same period in 2021.
The report also broke down performance by size based on bed count. Small hospitals (0-25 beds) saw a 25% drop in operating margin year over year but a 4% increase in net operating revenue. Large systems and hospitals with more than 500 beds performed worse, with a 76% drop in operating margin year over year.
There was a silver lining for hospitals, however. Hospital outpatient revenue was up 8% year over year, which includes urgent care, clinic networks and ambulatory surgery centers.
“Hospital outpatient clinics and services have been a bright spot in hospitals’ revenue column in 2022. While inpatient service continue to hamper margins, hospitals could lean on their outpatient services to buoy margins,” the report stated.
