Hospitals’ Total Expenses Continue to Climb Even as Margins Improve in First Half of 2023, According to New Syntellis Performance Solutions Report
High non-labor costs drive growth in overall expenses, but labor expense increases ease
CHICAGO – August 3, 2023 – A new report from Syntellis Performance Solutions, the leading provider of enterprise performance management software, data, and intelligence solutions, shows U.S. hospitals saw steady financial gains in the first half of 2023 following a very difficult year in 2022.
Median hospital operating margins in June rose to their highest level in 18 months, even as total expenses continued to grow. The median, actual year-to-date operating margin — which represents median operating margins for hospitals nationwide — reached 2% for the month, up from 0.7% in May. It was just the fourth month of positive hospital operating margins after more than a year of operating losses.
“Our nation’s hospitals began to see some much-needed financial improvements in the first half of 2023, but the road to recovery will be long as they work to rebuild from the financial ravages of 2022,” said Steve Wasson, Executive Vice President and General Manager for Data and Intelligence Solutions at Syntellis. “Numerous challenges continue to stifle their progress, including relentless increases in overall hospital expenses, workforce shortages, and mounting competition from non-traditional healthcare providers.”
Overall hospital expenses and non-labor expenses continued to grow in the first six months of this year. Total hospital expenses rose 2% year-to-date (YTD) versus the same period in 2022 as hospitals battled inflation and other economic challenges. Higher costs for non-labor items such as drugs and medical supplies drove the increase, with total hospital non-labor expenses up 4.7% YTD in June. Surgical supplies represent a key area where hospitals felt the impacts of higher non-labor costs. Operating room medical supply expense per minute at hospitals nationwide climbed 9% from June 2022 to June 2023.
At the same time, hospital labor expenses showed signs of easing. Total labor expenses were down slightly, declining 0.9% YTD compared to high labor costs in the first six months of 2022, when the COVID-19 Omicron surge intensified hospital staffing shortages and caused a spike in contract nursing rates. Hospitals used fewer contract nurses in recent months, which contributed to the slight decline in labor expenses. The share of hours worked by contract nurses as a percent of overall hospital nursing hours declined from 12.4% in March to 8.3% in June.
About the Data
This data will be featured in the upcoming Syntellis Performance Trends report — issued monthly — 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 features data from Syntellis’ Clinical Analytics™ and the Syntellis All-Payer Claims Data (APCD) - Longitudinal Claims database.
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