Many healthcare providers saw their revenues, operating margins and patient volumes increase this July, despite the fact that expenses continue to grow, according to a new report from Strata Decision Technology.
The report is based on data from more than 135,000 physicians and more than 1,600 hospitals.
Health systems continue to stand on much steadier ground than they were last year — but their year-to-date operating margin fell slightly from 2.3% in June to 2.1% in July, according to Strata’s data. As for hospitals, the year-to-date operating margin climbed to 6.5% in July, up from 4.9% in June.
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Strata defines a health system as an entity that owns one or more hospitals and a hospital as an individual facility within a system.
Higher levels of patient demand were a major factor contributing to hospitals’ operating margin gains, the report pointed out. Among hospitals, outpatient visits rose by 13.2%, and inpatient admissions went up by 8.2% year-over-year.
These wins for hospitals come in face of ever-increasing costs. From July of 2023 to July 2024, hospitals saw a 17.3% jump in their drug expenses, as well as a 16.4% rise in supply expenses. Total labor expenses grew by 5.7% year-over-year.
In terms of overall expenses, hospitals saw an 8.2% increase from July of last year.
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“Improvements in hospital margins and patient volumes are a promising sign to start the third quarter, but the decline in health system operating margins coupled with double-digit growth in non-labor expenses such as drugs and supplies are concerning,” Steve Wasson, Strata’s chief data and intelligence officer, said in a statement. “The industry will not be able to build lasting stability until we rein in rising expenses.”
The report also showed that growing expenses remain a major concern for physician practices across the country.
The median total expense per physician was $1.08 million during the second quarter of 2024. In July, this metric rose slightly to $1.1 million for July. This means the median total expense per physician has already increased by nearly 10% from 2023 — as well as by 17.5% from 2022.
When broken down by region, figures varied. The year-over-year increase was lowest among practices in the Great Plains region at 4% and highest among practices in the West at 15%.
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