- Hospitals nationwide posted strong operating performances in October, with average operating margins increasing both month over month and year over year, according to the National Hospital Flash Report for November from Kaufman Hall.
- Hospitals also saw modest gains in revenue and patient volume last month, and bad debt and charity care were lower.
- But performance on expenses was mixed. Hospitals logged decreases in labor costs but most non-labor expenses increased, according to the report, which is based on data from 800 hospitals during October.
Kaufman Hall attributed October's robust performance to increases in patient volume and revenue coupled with decreases in bad debt and charity care and overall operating expenses.
"A lot of the positive performance in this past month was driven by the fact that volumes were up on the inpatient side as well as the outpatient side," Erik Swanson, vice president of data and analytics at Kaufman Hall, told Healthcare Dive. The increase in patient activity led to a rise in revenue and improved performance, he said.
While outpatient volumes have been increasing steadily for the last 18-24 months, the "slight uptick" month over month in hospital admissions in October was more likely the result of seasonal fluctuations. During the colder months, inpatient admissions generally increase as a result of flu activity. In addition, people often opt to schedule elective procedures, such as knee replacements, during colder months, Swanson said.
The increase in year over year patient volume reflects the fact that inpatient admissions were down during October 2018, he said.
The median operating margin before interest, taxes, depreciation and amortization was up 20% month over month in October and 6% year over year.
Patient discharges rose 1.5% year over year and 4.8% month over month.
Revenues also increased. The net inpatient service revenue per adjusted patient discharge rose 1.2% month over month in October and 1.5% year over year.
Labor costs were down but other expenses were up in October, according to the report. Labor expense per adjusted discharge declined 3.1% month over month and 1.8% year over year. Drug expense per adjusted discharge was up 1.6% month over month and 2.2% year over year.
However, drug costs rose at a slower rate in October than what has been the case overall this year, reflecting increased efficiency associated with the uptick in patient volume, Swanson said. "Drug expenses have generally outpaced inflation in their growth," he said.
Meanwhile, bad debt and charity care as a percent of gross revenue in October was down 4.8% both month over month and year over year.
Looking at the first 10 months of this year, Swanson said hospital revenues have risen at a faster rate than expenses, leading to improved operating performance. He attributed this positive performance in part to the "relatively good rates" that hospitals negotiated into their contracts with commercial payers.