Healthcare Organizations Face Pressures of Ongoing Care Delivery Shifts, High Expenses, and Other Challenges, According to New Performance Trends Report

Hospitals sustain large losses in some areas of inpatient specialty care

CHICAGO – October 26, 2023 – A new report from Strata Decision Technology and Syntellis Performance Solutions found that U.S. healthcare organizations are experiencing exponential growth in demand for outpatient care services while suffering sizable losses in some areas of inpatient care. 

The special-edition Strata and Syntellis Performance Trends report was released in conjunction with Strata’s annual LIFT23 user conference. This first-ever joint publication brings together StrataSphere and Axiom financial, operational, and claims data from more than 2,000 hospitals and 135,000 physicians across the country for even more robust insights on national healthcare industry trends. The latest data show ongoing increases in physician practice revenues, as well as gains for hospitals across patient volumes, revenues, and operating margins. At the same time, many organizations continue to struggle with elevated costs and ever-evolving patient preferences. 

“Our nation’s vital healthcare organizations continue to face immense challenges including elevated costs, long-running labor issues, severe losses in some areas of inpatient care, and escalating demand for outpatient services,” said Steve Wasson, chief data and intelligence officer for Strata Decision Technology. “Despite revenue and margin gains, overall margins remain narrow and financial pressures continue to build. To ensure the long-term financial health of their organizations, healthcare leaders must understand these trends and respond with proactive, data-driven strategies.” 

Mounting demand for outpatient services is driving higher outpatient revenue as patients continue to demand care in less expensive and more convenient ambulatory settings. According to the report, outpatient revenue jumped 11.6% from July to August 2023 and was up 10% compared to August 2022.  

Orthopedic care trends further illustrate the shift, with outpatient volumes for the specialty more than 33 times higher than inpatient volumes in May 2023. Outpatient orthopedic volumes for the average health system rose 29.9% from 373,266 per month in January 2022 to 484,857 per month in May 2023. By comparison, inpatient orthopedic volumes rose to 14,304 per month in May 2023.  

Some areas of inpatient specialty care are a persistent drain on hospitals finances. For example, the median hospital lost an average of $3,630 for each inpatient orthopedic visit in May 2023. The total margin per case for individual outpatient orthopedic visits was $25 for the same period. While still low, the data show hospitals saw consistently higher margins for outpatient orthopedic care.  

A deeper dive examining specific orthopedic procedures found that outpatient knee replacement surgery volumes are more than five times higher than inpatient volumes in 2023. Since 2019, outpatient knee replacement surgeries have surged 293% while inpatient knee replacement surgeries have dropped 78%.  

Total margin per case for outpatient primary hip replacement procedures has consistently outpaced that for the same procedures conducted on an inpatient basis. In fact, hospitals have averaged losses for inpatient primary hip replacements for the past three years, and for inpatient primary knee replacement surgeries for the past two years.  

Labor costs remain high 

Meanwhile, labor costs continue to increase as hospitals contend with long-running shortages of nurses and other healthcare professionals. Total labor expense rose 3% from August 2022 to August 2023, contributing to a 4.2% increase in total hospital expenses over the same period.   

High costs for hiring contract nurses to fill workforce gaps contributed significantly to elevated labor costs in recent years, but the latest data show that use of contract nurses is on the decline. Over the past seven months, nursing contract hours as a percent of all worked hours declined from a 12-month peak of 13.4% in February 2023 to 9.2% in August 2023. The median hourly rate hospitals pay agencies to hire contract registered nurses (RNs) also steadily declined over the past several months, from a peak of $110.25 per hour in September 2022 to $86.90 in August 2023. Those rates remain significantly elevated compared to pre-pandemic levels, however, and are more than $30 per hour higher than rates paid for employed RNs.  

Physician practice expenses rise 

For physician practices, rising expenses continue to drive increases in the level of investment paid by hospitals, health systems, or large physician groups to subsidize insufficient physician practice revenues. The median investment per physician full-time equivalent (FTE) was $254,362 for August annualized. That was up 6.4% from 2022 and up 12.1% from 2021.  

Physician expenses — measured as total direct expense per physician FTE — climbed to $927,203 annualized for the month, marking a 6.2% increase from 2022 and an 11.7% jump from 2021. Increases in investment per physician FTE were consistent across specialties, including cardiology, gastroenterology, and orthopedic surgery. Cardiology had the largest investment per physician FTE at $481,391 for August 2023 annualized, up 7.9% from 2022 and up 24.2% from 2019.  


About the Data 

This data is featured in the special-edition Strata and Syntellis Performance Trends report, which uses data from Syntellis’ Axiom™ Comparative Analytics. The solution offers access to near real-time data drawn from more than 135,000 physicians from over 10,000 practices and 139 specialty categories, and from 500+ unique departments across more than 1,300 hospitals. Powered by Syntellis IQ, Axiom Comparative Analytics also provides data and comparisons specific to a single organization for visibility into how their market is evolving. The report also includes data from Syntellis’ All-Payer Claims Data (APCD) - Longitudinal Claims database and Strata’s StrataSphere cost and encounter data sets. 

About Strata Decision Technology 

Strata Decision Technology provides a cloud-based platform for software and service solutions to help healthcare providers better analyze, plan, and perform in support of caring for their community and reducing the cost of care. With its planned combination of Syntellis Performance Solutions’ Axiom solutions, approximately 800 healthcare organizations will rely on Strata to provide their financial analytics, planning and performance solutions. Strata has been named the market leader for Business Decision Support for 17 consecutive years, and Syntellis’ Axiom solutions have maintained HFMA Peer Review designation for nearly a decade, along with No. 1 rankings from Black Book Research for multiple years. By uniting these two industry leaders, Strata will continue to deliver market-leading solutions and world-class service, with an increased focus on accelerating innovation. Founded in 1996, our mission is to Help Heal Healthcare, working with hospitals and healthcare systems to drive margin to fuel their mission. For more information, please go to  

About Syntellis 

Syntellis Performance Solutions, now part of Strata Decision Technology, provides innovative enterprise performance management software, data, and intelligence solutions for healthcare organizations. Its solutions include enterprise planning, cost and decision support, and financial and clinical analytics to elevate organization performance and transform vision into reality. More than 2,800 organizations and 450,000 users rely on Axiom, Connected Analytics, and Stratasan software. With an HFMA Peer Review designation for nearly a decade and No. 1 rankings from Black Book Research multiple years running, Syntellis helps healthcare providers acquire insights, accelerate decisions, and advance their business plans. For more information, please visit


Syntellis Social Networks:
LinkedIn: Syntellis Performance Solutions 
Twitter: @Syntellis 

Media contact:

Sally Brown, Inkhouse