Becker's Hospital Review

5 CFO / FINANCE Hospital profitability headed into 2025: 10 notes By Laura Dyrda H ospital financial metrics overall have improved slightly in 2024 and on average, hospitals are more financially stable heading into 2025 when compared with last year, according to Kaufman Hall's National Hospital Flash Report. However, many hospitals are still well below pre-pandemic and even 2021 financial benchmarks. Syntellis Performance Solutions, a Strata company, gathered data from 1,300 hospitals in the month of October. Here are 10 things to know about hospital profitability based on the data. 1. Average hospital operating margins jumped in October to 6.5%, compared with 3.5% in September. Year-to-date average operating margins in October held relatively steady at 4.4%, up slightly from the previous six months when year to date operating margins were 4.3%. 2. Operating margins increased 9% month over month and 11% year over year in October. Year to date operating margins climbed 21% by the end of October compared to the same period last year, but were down 7% compared to 2023. 3. Operating EBITDA margin climbed 5% month over month and 7% year over year in October. e metric was up 13% year to date compared to last year, but still down 11% compared to 2021. 4. e year-over-year operating margin growth broken down by region is: West: 17% Midwest: 8% South: 9% Northeast / Mid-Atlantic: 5% Great Plains: 22% 5. Net operating revenue per calendar day grew 10% year over year. Broken down by region, net operating revenue per calendar day growth was: West: 12% Midwest: 10% South: 10% Northeast / Mid-Atlantic: 10% Great Plains: 14% 6. Small hospitals with 25 beds or less reported 10.4% year over year operating margin growth in October. Hospitals with 100-199 beds had an 8.1% year over year operating margin increase and those with 300-499 beds reported 26.7% operating margin jump in October. However, hospitals with 500-plus beds reported a slower 3.5% year over year operating margin growth. 7. Hospital discharges per calendar day increased 4% year over year and 3% month over month. Observation days as a percentage of patient days dropped 8% compared to October 2023. 8. e average length of stay dropped 4% year over year in October, and was down 2% year to date compared with 2023. 9. Inpatient revenue per calendar day was up 1% month over month and 6% year over year while outpatient revenue jumped 7% month over month and 13% year over year. Outpatient revenue grew 32% year to date compared to 2021 while inpatient revenue grew just 14% in the same period. 10. Labor expenses per calendar day grew 1% month over month and 7% year over year, showing stabilization. However, labor expenses are still up 18% compared to year to date 2021. n How an academic system nearly tripled its revenue in 5 years By Alan Condon M organtown, W.Va.-based WVU Medicine is growing at a rapid clip and has nearly tripled its annual revenue over the last five years. The academic system's annual revenue is close to $7 billion in 2024, up from about $2.8 billion in 2019, according to financial documents obtained by Becker's. WVU has grown significantly through hospital acquisitions during this period, adding 12 new campuses, with a 13th hospital acquisition — the 238-bed Weirton (W.Va.) Medical Center — expected to be completed Jan. 1. "We've grown very quickly. We've almost tripled our size from a revenue perspective," CFO Nick Barcellona said on the Becker's Healthcare podcast. "A key part of our strategy [for 2025] is really thinking about breadth and depth across our provider network and really shifting the mindset there from integration to optimization." WVU Medicine, which currently operates 26 hospitals across West Virginia, Ohio, Maryland and Pennsylvania, has been focused on finalizing several hospital acquisitions in 2024, but is shifting its focus to integrating hospitals and providers under its unified Epic EHR and IT systems and ensuring alignment from both a clinical and care perspective. "We're not going in and really changing anything from a care perspective. We give a lot of autonomy to our local business units, but all these administrative functions, we want to make sure that we're optimizing them now," Mr. Barcellona said. "We've spent all this money and gone through all the fighting fires of integration. Now, how can we then optimize that? Because that's where everybody gets better. That's why folks wanna join a system, and that's how a system gets from where they are to where they need to be in the future to be successful." n

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