Health system margins grew slightly in August to hit 1% again after dipping in July, according to Strata.
The data analytics firm collected information from 1,850 hospitals and 1350,000 physicians to gauge healthcare financial trends. Health system margins have hovered around 1% all year after hitting 2.1% in December. Hospital operating margins have been relatively flat as well.
Five things to know:
1. Average hospital margins were up 0.2 percentage points year over year in August, but dropped 0.5% from July. “The stagnant margin performance for both hospitals and health systems reflects the ongoing financial strain created by persistent expense pressures across the healthcare sector,” the report notes.
2. The average operating margin change year over year varied by market:
- Midwest: 0.8 percentage point decrease
- Northeast: 3.7 percentage point increase
- South: 0.5 percentage point increase
- West: 0.3 percentage point increase
3. Hospital size also impacted average margin change:
- 500+ hospital beds: 1.1 percentage point decline
- 200-299 beds: 1.1 percentage point decline
- 26-99 beds: 1.4 percentage point increase
4. Overall EBITDA margin dropped 0.1 percentage points year over year and 0.5 percentage points from July, according to the report.
5. Hospital expenses increased 5.6% year over year in August, with total non-labor expenses jumping 5.7 percent; labor expenses were up 4.6%. Operating revenue increased 5.7% year over year in August, with inpatient revenue jumping 4.3% and outpatient revenue jumping 6.3%.
