Hospital Finances: Volume & Throughput Boost Profits
- The financial health of hospitals showed signs of recovery in the first four months of 2025, according to a Kaufman Hall report.
- Improved patient volumes and more efficient patient throughput are credited with the turnaround in hospital financial performance. The report indicated a 3% year-over-year increase in discharges per calendar...
- Brian Pisarsky, managing director at Kaufman Hall, noted that hospitals are increasingly focused on streamlining patient transfer and discharge procedures to address bottlenecks.
Hospital finances are improving! Teh latest data reveals that hospital operating margins rose to 3.3% in early 2025, a notable jump from the previous year. Increased patient volume and optimized patient throughput are the primarykeyword drivers behind this financial turnaround, according to a Kaufman Hall report analyzing data from 1,300 hospitals nationwide. Though, hospitals must also manage secondarykeyword challenges like rising non-labor costs, including supply chain disruptions that could undermine recent gains. Discover how some facilities are implementing case management and streamlining procedures for better patient flow. For more information on the latest healthcare trends, check out News Directory 3. What key strategies will hospitals employ to navigate the remainder of the year?
Hospital Financial Performance Improves Amid Throughput Gains
Updated June 9, 2025
The financial health of hospitals showed signs of recovery in the first four months of 2025, according to a Kaufman Hall report. The analysis of data from 1,300 hospitals nationwide revealed an average operating margin of 3.3% between January and April. This marks an increase from 1.4% reported in May of the previous year.
Improved patient volumes and more efficient patient throughput are credited with the turnaround in hospital financial performance. The report indicated a 3% year-over-year increase in discharges per calendar day, coupled with a 3% decrease in the average length of stay.
Brian Pisarsky, managing director at Kaufman Hall, noted that hospitals are increasingly focused on streamlining patient transfer and discharge procedures to address bottlenecks.
“Volume is great, but how do we improve that throughput side of it to accommodate that volume as it comes in? That has been the challenge of many organizations,” Pisarsky said.
Despite progress, emergency department crowding remains a persistent problem. Pisarsky mentioned that many hospitals grapple with a significant number of patients held daily in emergency departments awaiting inpatient beds.
Some hospitals are beginning to see success by implementing strategies to manage patient flow and length of stay. These include placing case managers in emergency departments and creating emergency department-managed observation units. Increased collaboration among departments is also proving beneficial.
“We have one client that decreased their length of stay so much that they have actually closed a unit in their facility…So it does work,” he stated.
While hospital margins have stabilized, Erik Swanson, another managing partner at Kaufman Hall, cautioned that they remain vulnerable. he pointed to rising non-labor costs as a potential threat.
Although labor cost growth is slowing, non-labor expenses have increased by 8% in early 2025 compared to the same period last year. Supply chain disruptions and rising costs for goods are expected to intensify financial pressures as the year progresses.
What’s next
Hospitals will need to focus on managing non-labor costs and maintaining efficient patient throughput to sustain financial improvements throughout the remainder of 2025.