April 1, 2024

Hospitals report robust margins, caution about potential near-term disruption

Editor's Note

Data collected from more than 1,300 hospitals nationwide for Kaufman Hall’s National Hospital Flash Report shows strong margins—averaging 3.9% in February—but does not account for significant, near-term headwinds, according to a March 28 article from HealthLeaders.

Revenue growth is primarily from outpatient care, and inpatient revenue continues to decline, the report points out. Gross revenue also continues to rise at a faster rate than net revenue, which the report attributes to payer mix changes. Bad debt and charity care have also been trending upward.

Additionally, current data does not account for fallout from the February 21 cyberattack on Change Healthcare. As healthcare leaders weigh the full impact of the attack, cybersecurity has become a top priority. According to the report, Kaufman Hall advises hospitals to take steps to preserve liquidity; monitor denial rates and manage processing backlogs; prepare to address cybersecurity in future rating presentations; diversify clearinghouses and banking partners to reduce risk; and anticipate rating pressures on lower-liquidity credits.  

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