Tri-state area hospitals performed solidly in March and are showing sustained signs of improvement over the same period of 2023, according to the latest data from research firm Kaufman Hall. However, they still lag behind the country on the whole.
The data, released Thursday, shows that local facilities’ median operating margins declined by 5% year-over-year. However, that decrease was offset by improvements across their patient volume and revenue metrics. Discharges increased by 5% over 2023, while patient days and emergency department visits both grew by nearly 4%. The number of observation days as a percentage of patient days decreased by 26%, which could signal a positive change, as hospitals are typically reimbursed less for observation stays than inpatient treatment.
Net operating revenues jumped by 8%, the data illustrates, while inpatient and outpatient revenue grew by 8% and 3% over 2023. Bad debt and charity, or a measure of whether a hospital can obtain reimbursement for care it provided, rose by 29% over last year.
Erik Swanson, the senior vice president of data and analytics at the Chicago-based firm, said the improvements could be a sign that more local patients are electing to receive health care than they did in the years immediately following the pandemic. New York’s population density means hospitals can see a significant bump in performance when patients go back to their doctors, he said.
“Knowing where the position was of New York, the fact that we are starting to see some of these volumes recover generally probably indicates that patients are choosing to resume care in more meaningful ways than they have in the past,” he said.
However, Swanson noted, local facilities still lag behind the rest of the country, a trend that has persisted. According to Kaufman Hall, hospitals in other regions of the country posted higher year-over-year operating margin improvements. The South, for example, saw a 5% increase in median operating margins between 2023 and 2024, while margins grew by 8% in the Midwest.
Local hospitals’ spending patterns also reflect the idea that the tri-state area has been particularly hard-hit by the impact of the pandemic, compared to other regions, and the high costs of labor and providing care. The vast majority of expense metrics all average higher than they did in 2023. Total expenses are up 6%; total non-labor costs saw the largest increase at 7%. Labor expenses grew by 5% since 2023, a challenge that lingers as hospitals continue to enter into new contracts with employees and make more hires.
The differences between 2024 and 2021 are even more pronounced: hospitals’ total expenses were 20% higher than the same period in 2021. Total labor and non-labor costs were both 21% higher.
However, Swanson said there is one silver lining in the data which hints that local facilities could start to come in line with national trends. The month-over-month data could indicate that hospitals are becoming more efficient with their spending, he said.
He noted that the hospitals’ total expenses per adjusted discharge dropped by 2%, and labor costs per discharge declined by about 1%, in March compared to February.
“The hospitals in New York probably were set up, along with their expense base, to be able to handle more volume than they were previously seeing,” Swanson added. “And as such as the volumes began to come in they didn’t necessarily have to flex up staffing to meet that demand.”
Local hospitals’ median operating margins also bounced back to 2% in March, he added, a 34% increase from the challenging month of February. This statistic, along with improved revenues and patient volumes, bucked the national trend of sluggish volumes and revenues for the month, he said.
Swanson also predicted that hospitals will continue to improve their volume and cost ratios in the coming months–and that more patients will seek care in the summer. This will help area facilities perform at a more similar level to their counterparts in other regions as 2024 progresses, he said.
Kaufman Hall publishes national hospital flash reports each month.
Jacqueline Neber , 2024-05-06 11:33:05
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