August 2, 2022 – Financial pressure is continuing to create obstacles for hospitals, health systems, and physician practices. According to the data from Kaufman Hall’s National Hospital Flash Report and Physician Flash Report, the recent increase in patient volume and revenue can’t keep up with the historically high operating margins these organizations are facing.
“To say that 2022 has challenged healthcare providers is an understatement,” Erik Swanson, a senior vice president of data and analytics with Kaufman Hall, said to healthleaders. “It’s unlikely that hospitals and health systems can undo the damage caused by the COVID-19 waves of earlier this year, especially with material and labor costs at record highs this summer.”
Kaufman Hall’s median “year-to-date operating margin index for hospitals –0.09% through June, for the sixth month of cumulative negative actual operating margins. However, the median change in operating margin in June was up 30.8% compared to May, but down 49.3% from June 2021.”
Expenses have been a heavy weight for the past six months, but June saw a slight improvement as hospital expenses dropped 1.3%. Physician practices saw a drop in provider compensation, but this wasn’t enough to offset expenses.
“Given the trends in the data, physician practices need to focus on efficiency in the second half of 2022,” Matthew Bates, managing director and Physician Enterprise service line lead with Kaufman Hall, said in the email report. “Amid historically high expenses, shifting some services away from physicians to advanced practice providers like nurse practitioners or physician assistants could help rein in the costs of treating an increased patient load while taking some of the weight off the shoulders of physicians.”