Hospitals’ financial performance in November showed signs of continued stabilization and growth, according to Kaufman Hall’s latest monthly report.

Across the country, hospitals saw improved operating margins in November compared to the previous month and last year. Hospitals’ median year-to-date operating margin index rose to 2%, up from 1.5% in October. Their median single-month operating margin index increased as well — reaching 3.8% in November, compared to 3.2% in October.

Additionally, hospitals’ revenue per adjusted discharge increased in November while their total expense per adjusted discharge decreased — something Kaufman Hall’s analysts highlighted as a “sign of financial recovery.” These metrics demonstrate the hard work hospitals have done to lessen their use of expensive contract labor and deliver care in the most appropriate settings, they wrote.

The report also pointed out that hospital patients’ average length of stay went down in November, which suggests a trend toward more normal levels of patient acuity. Hospitals that deliver care using value-based contracts and bundled payment models will thrive in the future as the sector begins to focus more and more on providing care in the most effective clinical settings, the analysts predicted.

Though the data indicates the hospital sector is continually moving in the direction of recovery, the chasm between high- and low-performing hospitals “remains quite wide,” the report pointed out.

Below are the analysts’ four recommendations to help hospitals remain or work their way into the high-performing side of the spectrum.

1: Cost cuts can’t be your only strategy.

Hospitals must not fall victim to the belief that making cuts will be enough to achieve financial sustainability, the report cautioned. It suggested hospitals take a less conservative approach and get more serious about investing in strategic growth opportunities.

2: Don’t give up.

The hospitals able to maintain long-term success will be the ones who regularly pursue growth opportunities, the analysts noted. Hospital leaders need to know that these types of growth efforts are far from easy, they added. 

The report authors reminded leaders that strategic growth initiatives will always require a good deal of hard work, perseverance, discipline and flexibility.

3: Understand your growth vectors.

Hospital leaders should identify opportunities for growth based on their organization’s unique situation and market outlook, understanding that what has worked for other hospitals might not work for them, the report explained. 

“As performance indicators stabilize, hospitals should take advantage of the relative stability and re-embrace strategic growth if they hope to see continued success in 2024,” Erik Swanson, one of the report’s authors, said in a statement. “Growth strategies may vary from hospital to hospital, but all leaders should ensure that they are supporting goals beyond just profitability and scale, including business model transformation and diversification.”

4: Examine your market closely.

Every hospital in the nation needs to evaluate its market size, determine if the organization is essential in its market, and then ask itself how it can enhance its competitive position, Kaufman Hall’s analysts wrote.

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