Hospitals’
operating
margins
and
patient
volumes
dropped
slightly
in
March,
according
to
a
new
report
from
Kaufman
Hall.
Hospitals’
single-month
operating
margin
index
closed
out
March
at
3.4%
—
a
small
dip
from
February’s
3.6%.
It’s
also
worth
noting
that
March
ended
with
a
year-to-date
operating
margin
index
of
3.9%
—
which
is
still
significantly
higher
than
the
1.9%
index
that
ended
2023.
While
hospitals
were
doing
relatively
well
financially
during
the
first
quarter
of
the
year,
the
report’s
data
could
suggest
more
financial
challenges
ahead
for
hospitals.
Right
now,
it’s
unclear
whether
the
recent
declines
in
hospitals’
margins
and
volumes
will
be
short-
or
long-term,
said
Erik
Swanson,
senior
vice
president
at
Kaufman
Hall.
“Nothing
we
have
indicates
that
we
should
expect
a
large
drop
in
volumes,
but
the
next
couple
of
months
will
help
us
understand
those
longer-term
trends
more
fully,”
he
explained.
The
report
also
revealed
that
hospitals’
outpatient
revenue
decreased
by
5%
in
March,
due
mainly
to
the
competitive
outpatient
care
landscape.
“Many
hospitals
are
pivoting
to
offer
more
outpatient
care
options
in
the
wake
of
shifts
of
volume.
However,
they
are
often
finding
themselves
competing
for
patients
with
an
increasing
number
of
peer
organizations,
retailers
and
other
nontraditional
providers,”
Swanson
noted.
He
also
highlighted
hospitals’
ongoing
increases
in
incurred
bad
debt
and
charity,
as
well
as
increased
days
in
accounts
receivable,
as
additional
financial
challenges.
In
his
view,
some
of
the
increase
in
accounts
receivable
balances
is
due
to
the
Change
Healthcare
cyberattack,
as
organizations
are
extending
the
time
period
in
which
they
will
collect.
But
rising
bad
debt
may
also
be
a
symptom
of
larger
trends,
such
as
shifting
payer
mix
away
from
commercial
payers,
Swanson
added.
To
offset
declining
revenue
and
volume
trends,
the
report
recommended
that
hospitals
consider
boosting
their
growth
in
high-performing
areas
like
ambulatory
surgery
centers,
pharmacies
and
imaging
services.
Depending
on
the
hospital,
it
might
also
be
a
good
idea
to
establish
a
retail
presence,
Swanson
noted.
Photo:
claudenakagawa,
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