Alex Hunter and Michele Mayes
Operating margins for major U.S. health systems rebounded in 2018 but remain an average of 30% below their 2015 levels, according to a new analysis from Guidehouse.
The study of four years of financial disclosures of 103 large health systems that own 44% of the country’s hospitals found:
However, more than half of the sample remains below their 2015 operating margin levels by an average of 30%. Only in New England were margins higher than 2015 levels, and margins continued to decline in the Northeast, Southeast, and Midwest.
Health system margin improvement was driven by vigilance in expense control combined with a notable revenue turnaround. Revenue growth exceeded expense growth in 2018 for the first time in three years, with revenues growing at more than double the rate of expenses from 2017 to 2018.