U.S. Hospitals Start 2024 on More Solid Financial Ground, but Declining Cash Reserves Reflect Uncertainties, According to New Syntellis Performance Solutions Data 

Median hospital operating margins at 5.2% in January 

CHICAGO – Feb. 22, 2024 – Hospitals nationwide had a positive start to the new year in January, maintaining momentum toward more stable financial ground gained in the latter part of 2023, according to new data from Syntellis Performance Solutions, now part of Strata Decision Technology.  

The median U.S. hospital operating margin was 5.2% in January, as many hospitals saw revenue gains outpace expense increases. Compared to the first month of 2023, the median change in operating margin was up 3.8 percentage points, while the median change in operating earnings before interest, taxes, depreciation, and amortization (EBITDA) margin rose 3.6 percentage points. Data from future months will reveal whether operating margin improvements will continue, or if the increases are temporary. 

A decline in median days cash on hand suggests continued financial uncertainties for health systems nationwide. The metric was down 3.1% year-over-year and 27.4% for January 2024 versus January 2022. Healthcare organizations rely on these cash reserves as a safety net for emergencies, so any decline leaves them less prepared for incidents such as natural disasters or mass casualty events.

“The nation’s hospitals continue to fight an uphill battle as they work to build financial health, but they are beginning to make real progress with revenue and margin gains in recent months,” said Steve Wasson, chief data and intelligence officer with Strata Decision Technology. “It is an encouraging start to 2024. To avoid backsliding, healthcare leaders must maintain rigorous focus on managing costs and ensuring informed strategic initiatives.” 

Hospital expenses remained on the rise, with double-digit increases in drug and supply expenses from January 2023 to January 2024 as hospitals continue to feel the effects of inflation. Hospitals saw a 10.7% increase in supply expense and a 13% jump in drugs expense year-over-year, contributing to a 7% increase in total non-labor expense. Total labor expense rose 3.6% and total expense was up 5.6% over the same period.

The latest data also show continued growth in demand for outpatient services. Outpatient revenues jumped 10.6% from January 2023 to January 2024, while inpatient revenue rose 9.6% and gross operating revenue increased 10.3%. January marked the ninth consecutive month of year-over-year increases for the three revenue metrics.  

While hospitals had a solid start to 2024 overall, financial performance for the nation’s physician practices was not as strong. Ongoing expense increases continued as per-physician expenses hovered above $1 million. Total direct expense per physician full-time equivalent (FTE) was $1,003,166 for November 2023 through January 2024 annualized, representing an 8% increase over 2023 and a 16.3% jump compared to 2022. 

Higher physician expenses pushed up the level of investment needed (beyond revenues) to support physician operations, measured as median investment per physician FTE. The metric was up 9.2% from 2023 and 16.4% compared to 2022, climbing to $308,275 for November 2023 to January 2024 annualized.  

Read Syntellis’ latest “Monthly Healthcare Industry Financial Benchmarks” report to learn more.  

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 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. More than 800 healthcare delivery systems rely on Strata’s StrataJazz® and Axiom solutions. Strata has been named the market leader for Business Decision Support for 17 consecutive years, and its Axiom solutions have maintained HFMA Peer Review designation for nearly a decade along with No. 1 rankings from Black Book Research for multiple years. 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  www.stratadecision.com.    

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, Syntellis helps healthcare providers acquire insights, accelerate decisions, and advance their business plans. For more information, please visit www.syntellis.com.  

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Media contact:  

Sally Brown, Inkhouse