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Joaquim Cardoso MSc.
Servant Leader, Chief Research & Strategy Officer (CRSO),
Editor in Chief and Senior Advisor
January 12, 2024
This executive summary is based on the article “Key hospital and provider trends in 2024”, published by Health Care Dive and written by Susanna Vogel, on January 10, 2024.
What is the message?
As hospitals grapple with ongoing financial challenges, experts predict that 2024 will bring no significant relief, maintaining the trend of slim operating margins.
Healthcare providers will navigate labor shortages, inflation, and reduced COVID-19 relief funds, requiring strategic decisions to balance revenue and cost-cutting measures.
ONE PAGE SUMMARY
What are the key points?
Operating Margins Remain Thin:
Despite efforts at cost management, experts warn that hospitals will continue to face razor-thin operating margins in 2024, falling below the critical threshold of 3%.
Outpatient Care Investments:
Health systems will increase investments in ambulatory care centers, focusing on geographic expansion and meeting evolving patient preferences. Advances in technology make outpatient procedures more feasible and cost-effective.
Service Line Adjustments:
Hospitals may invest in or divest from specific service lines based on performance. Struggling hospitals may close or reduce underperforming service lines, particularly in maternity, rehabilitation, or behavioral units, impacting patient care.
Labor Investment Strategies:
Hospitals acknowledge elevated labor expenses post-pandemic. While investing in grow-your-own nursing programs is expected to become the norm, health systems may continue layoffs in IT and administrative departments, with a trend towards outsourcing certain tasks.
Consolidation Trends:
Despite regulatory scrutiny, healthcare providers will explore consolidation avenues, with potential mergers facing delays due to antitrust scrutiny. Some experts anticipate “roll-ups” and partnerships with non-traditional entities like tech giants or retailers.
What are the key statistics?
Operating margins for not-for-profit hospitals are projected to remain below the critical 3% threshold.
Less than 20% of adults in the U.S. and only 8% of eligible kids have received the COVID-19 vaccine.
Nearly 60% of physicians employed by hospitals express concerns about non-physician ownership affecting care quality.
What are the key examples?
Major health systems like HCA and Ascension announce plans for expansion and investment in outpatient services.
Hospitals, such as Kaiser Permanente, consider closures of underperforming service lines.
Health systems like HCA, Tenet, and CHS emphasize the importance of nursing programs in recruitment efforts.
Conclusion
Healthcare providers face a challenging landscape in 2024, with financial pressures, labor shortages, and strategic decisions impacting their operations.
The focus on outpatient care, labor investment strategies, and potential consolidation reflects the industry’s adaptability in navigating ongoing challenges.
As hospitals strive to maintain financial stability, the year ahead demands careful balancing of investments and cost-saving measures to ensure sustainable healthcare delivery.
To read the original publication, click here.
