What You Should Know:
– A glimmer of hope shines through for hospitals, according to November data from Kaufman Hall’s National Hospital Flash Report points to ongoing stabilization and even growth.
– While the scars of the pandemic and economic challenges remain, key indicators suggest gradual recovery, with operating margins edging up and revenue streams climbing.
Margins on the Rise, Though Gap Between Performers Persists
The median calendar year-to-date operating margin index for hospitals in November 2023 reached 2.0%, marking a welcome improvement compared to the previous year. Inpatient and outpatient revenue experienced positive growth, rising 5% and 9% respectively. This trend is further bolstered by a decline in total expense per adjusted discharge and a simultaneous increase in revenue per adjusted discharge – both signs of financial progress.
Patient Acuity Normalizes, Value-Based Care Takes Center Stage
The average length of stay in hospitals dropped 6% year-over-year, indicating a return to more typical patient acuity levels. This shift presents significant opportunities for healthcare organizations embracing value-based and bundled payment models, as they can transition patients to the most appropriate care settings while optimizing financial performance.
Embracing Strategic Growth: The Key to Sustainable Success
“Hospitals should leverage this period of relative stability to re-ignite strategic growth initiatives if they aim to thrive in 2024 and beyond,” emphasizes Erik Swanson, senior vice president of Data and Analytics at Kaufman Hall. “Growth strategies will differ based on individual needs and market realities, but all leaders must prioritize goals beyond just profitability and scale. Business model transformation and diversification are equally essential for long-term success.”
Actionable Insights for Hospital Leaders in 2024
Now is the time for hospitals to re-embrace strategic growth to succeed in 2024 and beyond. Kaufman Hall outlines the following 4 key action steps for hospitals:
- Cutbacks won’t cut it: Rethink the “cut our way to viability” approach and shift focus towards strategic growth and reinvestment.
- Growth requires dedication: Achieving meaningful growth demands discipline, perseverance, and adaptability.
- Identify your growth vectors: Explore relevant options like market expansion, essentialization of services, and competitive repositioning.
- Ask the crucial questions: Evaluate your market size, market essentiality, and competitive position to craft an effective growth strategy.
The path to a brighter future for hospitals lies in actively pursuing strategic growth. By leveraging emerging opportunities and focusing on long-term goals beyond just financial metrics, healthcare organizations can pave the way for sustainable success in the evolving healthcare landscape.