Dive Brief:
- In May, the median year-to-date operating margin index for hospitals hit 0.3%, marking the third consecutive month of positive performance, according to a new hospital report from Kaufman Hall.
- Hospitals’ financial stabilization is attributable in part to patients’ increased utilization of outpatient hospital services and decreased labor costs, the consultancy found.
- To keep the positive momentum, hospitals should pay attention to the trend toward outpatient services, Erik Swanson, Kaufman Hall SVP of data and analytics, said in a statement, calling the shift “particularly important.”
Dive Insight:
Hospitals have pivoted to offer more outpatient services to offset the lingering impacts of the COVID-19 pandemic, which depressed inpatient volumes — an interest that’s only accelerated in today’s uncertain financial climate.
The Kaufman Hall analysis provides support that this bet paid off. Outpatient revenue per calendar day rose 14% year over year in May, while net operating revenue per day grew 9%.
Patients heading to outpatient clinics for care is boosting hospital finances, but not all healthcare stakeholders are benefiting from the trend.
Health insurers Humana and UnitedHealth have flagged higher outpatient utilization as problematic for insurers, warning the figures could push their patient spend toward the higher end of projections. The insurers plan to undergo expense-saving measures and have incorporated their expectations into Medicare Advantage bids for 2024.
Hospitals’ financial health has yet to return to pre-pandemic levels, Kaufman Hall found, but it appears to be stabilizing as Congress debates changing federal payments to providers, including in pending site-neutrality legislation.
This week, the American Hospital Association put out yet another report arguing against site-neutrality regulations, which would align fee-for-service payment rates across ambulatory settings, claiming the laws would hamper their ability to provide quality patient care.
The lobby cited current negative Medicare outpatient profit margins to argue that hospitals could not support further cuts to reimbursement.
