Financial performance among U.S. hospitals improved toward the end of this year’s second quarter — but there are still concerning gaps between the highest- and lowest-performing organizations, according to new research released by Kaufman Hall.
The consulting firm analyzed data from 1,300 hospitals across the country and found that hospitals’ financial margins improved to 3.7% in June, up from 1.9% in May.
The report noted that hospitals’ revenue on a volume-adjusted basis grew — meaning that hospitals are actually earning more per patient, rather than providers just seeing more people. Hospitals also saw increases in outpatient revenue, which suggests hospitals are figuring out how to best utilize their outpatient facilities.
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“Higher performing hospitals are nimbler on both the revenue and expense sides,” Erik Swanson, managing director at Kaufman Hall, said in a statement. “They may be expanding their outpatient footprint, diversifying services or managing expenses like purchased services by centralizing some functions. They are also more likely to have value-based care or bundled care arrangements in place.”
In an interview last summer, Swanson pointed out that hospitals with strong finances also tend to place a strong emphasis on patient throughput, which leads to timely and appropriate patient discharges.
He recommended smaller hospitals take actions that will pay off no matter what their future holds. This means doing things like tightening up day-to-day operations and making sure they’re accurately capturing all the revenue they are owed.
These steps can help stabilize a hospital’s finances in the near term while also making the organization more attractive for future partnerships or affiliations.
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Kaufman Hall’s report also showed that hospitals’ bad debt went up in June compared to the month prior. It pointed out that bad debt increased at a greater rate than in previous months, which could signal a change in the number of patients who are covered by public programs like Medicaid.
Additionally, the research found that hospitals’ non-labor expenses and purchased services continue to rise.
Despite modest improvements, growing costs and bad debt remain serious concerns for hospitals. Without a sustained focus on efficiency and revenue capture, weaker organizations could become even more unstable.
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