Modern Healthcare May 23, 2019
Rob Lazerow and Emily Connelly, Advisory Board

Hospital and health system operating margins have plummeted in recent years. Leaders are anxious to see if this trend has bottomed out or if margins will remain in freefall.

In 2016, the typical not-for-profit system’s expenses grew by 7.1%—outpacing revenue growth by a full percentage point.1 The next year things got even worse, as operating margins fell to an all-time low of just 1.6%.2

Unlike in previous eras, hospitals can’t blame today’s grim financial picture on a single economic factor. Rather, they’re facing a variety of volume and pricing pressures—including direct pricing threats, site-of-care shifts, and new payment models—which are hitting the industry all at once.
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Topics: Health System / Hospital, Market Research, Physician, Provider, Trends
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