September 2018
Profitability
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National Profitability Observations
For the fourth consecutive month, the National Hospital Flash Report demonstrates strong profitability in the sector. Despite softer performance in July, August performance was solid with a 103 basis points (bps) month-over-month improvement in EBITDA and a 106 bps improvement in Operating Margin. Despite continued flat-to-declining inpatient volumes and revenue, hospitals nationwide are demonstrating strong expense performance.
Of particular note is the 4 percent decline in labor expense and 2 percent decline in non-labor expense year over year. However, as noted last month, the strong profitability performance appears to be unsustainable as hospitals are challenged to continue reducing operational expenses at a faster rate than flat/declining revenues. Without incremental and new sources of revenue, the profitability of the nation’s hospitals will continue to face pressure.
Trends in Operating EBITDA Margin and Operating Margin demonstrated discrepancies. A 2 percent year-over-year improvement in EBITDA, but a 1 percent decline in Operating Margin indicates increasing interest, depreciation, and amortization expense. This trend will continue to be monitored in future reports, including the impact of legacy capital investments on profitability.
Profitability % Change
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National Observations
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By Region
National Observations
By Bed Size
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National Hospital Flash Report
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