Hospital Margins Stay in the Red as Patient Volumes Shift and High Costs Persist, According to Latest Syntellis Performance Solutions Report

Data on knee replacement surgeries illustrate dramatic move from inpatient to outpatient services

CHICAGO - April 6, 2023 - Syntellis Performance Solutionsthe leading provider of enterprise performance management software, data, and intelligence solutions, today released its monthly Syntellis Performance Trends-Healthcare report which highlights effects of the ongoing shift to outpatient care.

Hospital operating margins remained in the red for the second month of 2023, continuing trends seen throughout 2022 as hospitals and health systems struggle with shifting patient volumes, high expenses, and other economic challenges. The year-to-date operating margin — representing median margins for hospitals nationwide — was -0.9% in February, down from -0.8% in January. Over the past 12 months, the metric fluctuated from a low of -2.4% in April 2022 to -0.4% in September of 2022. 

“Hospitals and health systems continue to endure long-running margin pressures as the industry undergoes fundamental changes in where patient care is delivered,” said Steve Wasson, Executive Vice President and General Manager for Data and Intelligence Solutions at Syntellis. “The move of knee replacement care away from inpatient settings is a significant pain point for organizations that historically relied on these surgeries to strengthen operating margins. It is a primary example of the need for healthcare leaders to adapt to evolving patient behaviors and payer incentives.”

The latest revenue metrics and trends in knee replacement surgeries illustrate those changing patient preferences as more people opt for care in outpatient settings. Outpatient revenue rose 16.1% year-over-year (YOY) in February 2023. Outpatient care also continued to grow as a share of overall revenue, as measured by the inpatient/outpatient adjustment factor, which grew 6.2% YOY and 3.4% compared to January 2023.


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Clinical data on total knee replacements show a dramatic drop in the proportion of such surgeries performed in inpatient settings in recent years. The Centers for Medicare and Medicaid Services removed total knee replacements from its inpatient-only list in January 2018. At the time, about 80% of total knee replacement surgeries were done in inpatient settings. By the start of the COVID-19 pandemic in March 2020, they had fallen to 59%. The latest data show just over 30% of total knee replacement surgeries are performed in inpatient settings.

Recent All-Payer Claims data further reinforce the industry’s transformation as patients overwhelmingly sought care in outpatient settings before, during, and after knee replacement surgeries throughout 2022. Office or clinic-based settings were the most common sites for pre- and post-surgery care in 2022, attracting 64% of patients for the 90 days prior to surgery and 75% of patients for the 90 days post-surgery. The claims data show that more than half of knee replacement surgeries (55%) occurred in hospital outpatient facilities, while 16% were in ambulatory surgery centers, and 29% were in hospital inpatient centers.

Overall hospital expenses remained high in February due to the ongoing effects of inflation and other economic challenges. From February 2022 to February 2023, total expense rose 2.9% and total non-labor expense increased 5%, as costs for supplies and purchased services rose. A relatively small 0.8% YOY change in total labor expense combined with a -8.9% month-over-month decline in the metric may signal potential easing in rising labor costs, but it remains to be seen whether it will become a trend.

About the Data

The Syntellis Performance Trends report — issued monthly — uses data from Syntellis’ Axiom™ Comparative Analytics, which 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. This month’s report also features data from Syntellis’ Clinical AnalyticsTM and the Syntellis All-Payer Claims Data (APCD) - Longitudinal Claims database.

About Syntellis

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

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Press Contact:
Cam Granstra
Syntellis Performance Solutions