Hospital profitability headed into 2025: 10 notes

Hospital financial metrics overall have improved slightly in 2024 and on average, hospitals are more financially stable heading into 2025 when compared with last year, according to Kaufman Hall’s National Hospital Flash Report.

However, many hospitals are still well below pre-pandemic and even 2021 financial benchmarks. Syntellis Performance Solutions, a Strata company, gathered data from 1,300 hospitals in the month of October. Here are 10 things to know about hospital profitability based on the data.

1. Average hospital operating margins jumped in October to 6.5%, compared with 3.5% in September. Year-to-date average operating margins in October held relatively steady at 4.4%, up slightly from the previous six months when year to date operating margins were 4.3%.

2. Operating margins increased 9% month over month and 11% year over year in October. Year to date operating margins climbed 21% by the end of October compared to the same period last year, but were down 7% compared to 2023.

3. Operating EBITDA margin climbed 5% month over month and 7% year over year in October. The metric was up 13% year to date compared to last year, but still down 11% compared to 2021.

4. The year-over-year operating margin growth broken down by region is:

West: 17%
Midwest: 8%
South: 9%
Northeast / Mid-Atlantic: 5%
Great Plains: 22%

5. Net operating revenue per calendar day grew 10% year over year. Broken down by region, net operating revenue per calendar day growth was:

West: 12%
Midwest: 10%
South: 10%
Northeast / Mid-Atlantic: 10%
Great Plains: 14%

6. Small hospitals with 25 beds or less reported 10.4% year over year operating margin growth in October. Hospitals with 100-199 beds had an 8.1% year over year operating margin increase and those with 300-499 beds reported 26.7% operating margin jump in October. However, hospitals with 500-plus beds reported a slower 3.5% year over year operating margin growth.

7. Hospital discharges per calendar day increased 4% year over year and 3% month over month. Observation days as a percentage of patient days dropped 8% compared to October 2023.

8. The average length of stay dropped 4% year over year in October, and was down 2% year to date compared with 2023.

9. Inpatient revenue per calendar day was up 1% month over month and 6% year over year while outpatient revenue jumped 7% month over month and 13% year over year. Outpatient revenue grew 32% year to date compared to 2021 while inpatient revenue grew just 14% in the same period.

10. Labor expenses per calendar day grew 1% month over month and 7% year over year, showing stabilization. However, labor expenses are still up 18% compared to year to date 2021.