Operating margins plunged by
more than $190 million for the first six months of 2023 in latest analysis of
hospital and health system financial data, with average losses nearly doubling
Nov. 13, 2023, Saint Paul,
Minn. – A new Minnesota Hospital Association (MHA) analysis of hospital and
health system finances shows losses growing at many of the state’s major health
care providers. Data collected from MHA members show ongoing financial losses
nearly tripled in some cases. Key findings include:
- Median hospital and health system operating margins declined from
-.5% in 2022 to -2.7% in the first half of 2023.
- 67% of hospitals and health systems in the MHA analysis had
negative operating margins, which means they were losing money. This is up from
55% of hospitals and health systems that had negative margins in 2022.
- The costs of labor grew by 7%, and supply and service costs grew
a quarter of member hospitals and health systems reported labor costs rising by
double digit percentage points, and a third of hospitals said supply and
service costs had risen by more than 10% over 2022.
losses also correspond to a rise from 62 percent to 64 percent in the
proportion of Medicare and Medicaid patients reported by nearly every hospital.
Those programs continue to reimburse providers well below the actual cost of
providing care, routinely underpaying an estimated 27% below cost for Medicaid,
and 20% below cost for Medicare.
cuts in the federal 340B Drug Pricing Program, persistent delays in discharging
patients to step-down care, and a crisis in behavioral and mental health care
are adding to the grave financial challenges hospitals and health systems are
facing,” says MHA President and CEO Rahul Koranne.
Similar pressures have
closed programs and cut care at more than 50 hospitals across the country
already in 2023 and hundreds more could follow. Nearly 30% of U.S. rural
hospitals are facing closure, according to the Center for Healthcare Quality
and Payment Reform, and that could include as many as a half dozen in Minnesota
if urgent action is not taken.
About the Data: The
non-public financial data referenced here is provided voluntarily by hospitals
and health systems in Minnesota. It is not audited financial data but is more
current than public financial reports issued by the hospitals and health systems.
The data comes from more than 70 hospitals that are members of the MHA. It
includes both large health systems and small rural hospitals in Minnesota.