Hospital operating margins are showing signs of stabilizing, despite the effects of inflation and increasingly high operating costs, according to a new report shared by Syntellis Performance Solutions. 

For the months of March and April 2023, median year-to-date margins held at 0.4%. According to the latest Syntellis Performance Trends-Healthcare report, which analyzes data from 1,300 hospitals and 135,000 physicians from over 10,000 practices, this represents a slight improvement in margins, which spent the prior 15 months in the red. 

The positive news comes despite continuously rising hospital expenses. April 2023 marked the 12th month in a row of year-over-year (YOY) increases in total expenses and total nonlabor expenses, rising 2.2% and 3.7% for the month. Labor expenses also have steadily increased YOY for the last 11 months, rising 1.1% in April. 

Labor expense increases are especially evident when it comes to staffing nurses, with costs sitting significantly higher than those from just two years ago. Compared to April of 2021, the nursing labor expense per patient day in April of 2023 has increased by 17.6%, according to the report. This is due, at least in part, to nationwide staffing shortages—nurses left the field in droves during the ongoing pandemic and a study by the National Council of State Boards of Nursing indicates that up to 610,000 could exit by 2027. 

Steve Wasson, executive vice president and general manager for data and intelligence solutions at Syntellis, expressed enthusiasm for the latest report’s positive indicators, but cautioned that the threats posed by an uncertain economic landscape continue to loom over hospitals. 

“While a steadying of hospital operating margins is a positive sign, our nation’s hospitals and health systems remain on dangerously thin ice with extremely narrow operating margins,” Wasson said in a prepared statement. “Healthcare leaders are finding ways to meet evolving patient needs and grow revenues, but relentless expense increases and other economic and industry challenges threaten to plunge them back into the red at any time.” 

The detailed market analysis is available here.