Hospitals have had a tough year financially, but things could get better.
According to the “Kauffman Hall Hospital Report” released in early October, the operating profit margin of all hospitals nationwide in August increased by 8% compared to the same month last year, and in the first eight months of this year it was higher than the same period in 2022. Compared to that, it jumped 17%. EBIDA August year-to-date sales also improved by 10% compared to the previous year.
However, not all regions had the same success.
The South and Northeast/Mid-Atlantic regions had the largest increase in operating margin, reaching 20% year-over-year in August. Operating margin growth for the month was followed by the Western region at 8% year over year, followed by the Great Plains region at 7%.
Hospitals in the Midwest fared the worst, with operating margins flattening from August 2022 to 2023. However, compared to the previous month, hospitals in the Midwest saw operating profit margins increase by 41%, the largest increase of any region.
Hospitals in the South saw the largest improvement in EBIDA, with 22% growth from August 2022 to 2023, followed by the Northeast/Mid-Atlantic region and the Great Plains region.
Large for-profit health systems are also showing signs of increasing profitability, regardless of location. Dallas-based Tenet Healthcare reported operating margins of 11.9% and profits of $604 million. HCA Healthcare, based in Nashville, Tenn., reported operating margins of 11.4% and revenue of $1.8 billion. King of Prussia, Pennsylvania-based Universal Health Services reported second-quarter operating margins of 8% and revenue of $280.1 million.
Not-for-profit health systems continue to struggle with profitability.
Chicago-based CommonSpirit, which operates 142 hospitals, reported a 3.9% decline in operating margin and an operating loss of $1.4 billion for the fiscal year ending June 30. Ascension, a St. Louis-based company that operates 140 hospitals, reported a 5.6% decline in recurring operating margins at the end of the year, resulting in a $1.6 billion loss from recurring operations. Providence, based in Renton, Wash., reported an operating margin of -3.9% for the first half of the year ended June 30, which was an improvement from the -7.3% operating margin reported in the same period last year.