Latest Takeaways

July 20, 2023
"Despite some improvement in operating margins, executives at hospitals and health systems are wary of a possible recession and what it would mean for their balance sheets. For example, HCA Healthcare hired consultants to study how previous downturns affected the business, CFO Bill Rutherford said in June at the Healthcare Financial Management Association conference. Revenue cycle management remains a key topic among executives, including how to tap into new revenue streams and automate back-office functions for more efficiency."

Executive Summary

Updated: July 25, 2023

  • In the latest release of hospital data, about 89% have reported finances for 2022 compared to the number that have reported for 2021. That includes about 87% of acute-care hospitals and 92% of critical-access hospitals. The next update is expected in October.

  • A Modern Healthcare analysis found median net capital costs for critical-access hospitals increased almost 17%, while those for acute-care hospitals rose only 1% over the same period. The analysis examined cost reports for hospitals filing from 2018 through 2022, and results of the analysis can be found here. It includes medians for acute-care hospitals and critical-access hospitals, as well as medians by Modern Healthcare's hospital peer groupings. Net capital costs are defined as the total costs of buildings, fixtures and movable equipment.

  • Most hospitals saw a downward trend in median salaries, starting as early as 2018. The COVID-19 pandemic added pressure to those numbers over the last three years.

  • Operating expenses for hospitals began to climb when the COVID-19 pandemic hit in 2020, most notably among children’s hospitals and teaching hospitals typically affiliated with universities. That ascent has continued, driven in part by unplanned labor costs amid a strained and short-staffed working environment. Some critical-access hospitals began to see relief in 2022.

  • Days cash on hand received a boost in 2020 as the federal government began funneling relief dollars for the COVID-19 pandemic. The assistance helped keep net margins strong in 2021, with children’s and critical access facilities well exceeding a median margin of 10%. However, most COVID-19 funds ran out by the end of 2021. In 2022, the lack of funding and macroeconomic factors contributed to significantly depressed margins.

  • Net patient revenue picked up in 2021, as hospitals restarted elective procedures and patients were more comfortable coming in for appointments. Many hospitals exceeded revenue medians recorded before the pandemic. In 2022, however, net patient revenue began to slump, particularly among teaching and critical-access hospitals. 


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Medicare Revenue

Represented as a percentage of total net patient revenue for acute-care hospitals reporting 2022 data



National* totals, by year and hospital type