Hospital performance improves in June, but lags 2025
Hospitals' operating margins remain inconsistent across the industry, with rising uncompensated care burden and non-labor expenses increasingly weighing down performance, according to June operating data.
In June, hospitals demonstrated improved financial performance, but overall outcomes remain below 2025 levels, grappling with mounting uncompensated care pressures and rising expenses, Kaufman Hall's recent monthly benchmarks reveal. The healthcare advisory firm reported a year-to-date operating margin index of 2.5% and a single-month index of 4.5%, a 6% shortfall from the first half of 2025 and a 6% rise over May's median.
Additionally, hospitals witnessed a 2% surge in daily bad debt and charity, marking a 17% increase year-to-date compared to 2025. Uncompensated care pressures, accounting for 8% of hospitals' gross operating revenue, are intensifying, said Erik Swanson, managing director of Kaufman Hall's Data and Analytics group.
Despite surface-level stability, performance disparities persist among hospitals, particularly impacting those serving vulnerable populations. Proactive resource allocation and expense management are crucial as these pressures persist. The firm's monthly reports analyzed data from 1,300 nationwide hospitals, noting a 1% increase in daily discharges and a 5% rise in adjusted discharges compared to May.
Emergency department visits surged 2% month-over-month, while operating room minutes increased by 4% year-over-year. Average length of stay decreased, leading to a 5% rise in daily net operating revenue and a 6% increase in gross operating revenue. Notably, outpatient revenue grew by 8%, while inpatient revenue expanded by 5%.
Net patient service revenue per adjusted discharge remained flat month-over-month but rose 2% per adjusted patient day. Comparing year-to-date data, daily net operating revenue and gross operating revenue both increased by 6-7%, with inpatient revenue up 5% and outpatient revenue by 8%. Net patient service revenue also rose 5% per adjusted discharge and per adjusted patient day.
Expenses, however, grew more slowly. Daily total expenses increased by 3% month-over-month but declined by 1% per adjusted discharge. Non-labor expenses, such as supplies and drugs, drove the upward pressure. Year-to-date, daily total expenses are 6% higher, with non-labor expenses responsible for 4% of the growth. This trend underscores the need for targeted, disciplined spend management strategies, the report emphasizes.
Written by urgent.news from Fierce Healthcare's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
