Hospital funds appear to be stabilizing general — however a better look reveals that there’s a widening hole between the highest- and lowest-performing organizations, in keeping with a report launched by Kaufman Corridor this week.
For the report, Kaufman Corridor examined information from greater than 1,300 hospitals. It confirmed that hospitals’ year-to-date working margin index held regular at 4.1% in June for the second month in a row.
Erik Swanson, senior vp at Kaufman Corridor, mentioned that there are a number of elements contributing to the rising hole between hospitals which are performing effectively financially and people who aren’t.
“Larger-performing hospitals have developed methods to pursue alternatives in outpatient companies, that are rising at a considerably quicker tempo than inpatient companies. In addition they have been simpler at driving down utilization of costlier contract labor — typically, they elevated wage charges for full-time workers, which appears to have helped them recruit and retain full-time workers,” he defined.
Swanson additionally identified that hospitals with robust funds additionally are typically very targeted on affected person throughput, which results in well timed and acceptable affected person discharges.
In his opinion, smaller hospitals which are persevering with to battle financially ought to undertake a “no-regrets’ technique.
“A ‘no regrets’ technique for these hospitals is to concentrate on efforts to stabilize monetary efficiency by operations enchancment and correct income seize. These efforts will assist hold the group on a financially sustainable path and also will assist place the hospital for doable partnership alternatives,” Swanson said.
Kaufman Corridor additionally launched one other report on healthcare funds this week, with this one exhibiting that rising labor prices are right here to remain.
The report demonstrated that well being techniques proceed to battle declining income and growing labor bills — within the second quarter of this yr, labor bills accounted for 84% of well being techniques’ complete prices.
This aligns with current analysis from Strata Choice Know-how, which confirmed that healthcare suppliers’ labor bills grew by 5.2% whereas their non-labor prices rose by 3.3% from June 2023 to June 2024. This resulted in a 4.8% improve in general bills throughout the 12-month interval, in keeping with the report.
“Not like most companies, hospitals and well being techniques can not simply change costs to account for rising prices. Greater than half of the common hospital’s revenues come from authorities applications akin to Medicaid and Medicare, and these funds can’t be negotiated — and usually pay beneath prices. Income from industrial well being plans is tied to multi-year contracts and charges are renegotiated solely when current contracts expire,” Swanson mentioned.
These price pressures will stay an enormous burden for smaller and rural hospitals, Kaufman Corridor’s analysis confirmed.
Image: Feodora Chiosea, Getty Pictures
