Hospital Finances Show Signs of Stabilizing with Six Months of Positive Margins, According to New Syntellis Performance Solutions Data
Hospital revenues and volumes increase, but overall expenses continue to climb
CHICAGO – Sept. XX, 2023 – A new report from Syntellis Performance Solutions, now part of Strata Decision Technology, shows that August was a positive month for the nation’s hospitals, which saw gains across most volume, revenue, and margin metrics.
Median hospital operating margins — measured as actual year-to-date (YTD) operating margin — rose to 1.4% in August. While margins remain narrow, the increase was a welcome turn after the metric dropped from 2% in June to 1.1% in July.
“While the future remains uncertain, the fact that we now have six months of positive operating margins is a reassuring sign that hospital finances are stabilizing following more than a year of negative results,” said Steve Wasson, Executive Vice President and General Manager for Data and Intelligence Solutions at Syntellis, part of Strata Decision Technology. “The nation’s hospitals have been on a rollercoaster the last few months. The upswing in August is especially encouraging after hospital operating margins rose rapidly in June only to decline the following month, raising concerns that the metric could sink back into the red.”
Outpatient revenue had sizable increases in August as patients continue to demand a shift in care to less expensive and more convenient ambulatory settings. Outpatient revenue rose 10% compared to August 2022 and 11.6% versus July 2023. Inpatient revenue also increased, up 4% year-over-year (YOY). The combined revenues pushed gross operating revenue up 7.8% from August 2022 to August 2023.
The data suggest hospitals saw a decrease in the severity of patient cases for the month, as patients required shorter hospitalizations. Average length of stay decreased -4% YOY and -3.5% versus July 2023, and the share of patients held in observation status was essentially flat, with observation days as a percent of patient days rising just 0.1% YOY for August.
Other patient volume metrics were up for the month. Adjusted discharges rose 6.5%, adjusted patient days rose 1.2%, operating room minutes increased 2.8%, and emergency department visits rose 0.9% from August 2022 to August 2023.
While overall financial performance improved, hospitals continued to contend with escalating expenses. Total expense, which includes total labor and non-labor expenses, was up 4.2% YOY, and total labor expense increased 3% YOY. Total non-labor expense again had the biggest increase at 6% versus August 2022, as inflation continued to drive higher drug and supply expenses. Drug expense rose 7.3%, supply expense increased 5.4%, and purchased service expense was up 3.8% YOY for the month.
About the Data
This report 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.
About Strata Decision Technology
Strata Decision Technology provides an innovative cloud-based financial planning, analytics and performance platform that is used by healthcare providers for financial planning, decision support and continuous improvement. Founded in 1996, the Company’s client base includes over 2,000 hospitals representing over 450 healthcare delivery systems. The Company’s StrataJazz® application is a single integrated software-as-a-service platform that includes modules for financial planning, decision support and performance management. Strata’s headquarters are in Chicago, IL. For more information, please visit www.stratadecision.com.
Syntellis Performance Solutions 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 www.syntellis.com.
Syntellis Performance Solutions