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Last year was the worst financial year for U.S. hospitals and health systems since the start of the COVID-19 pandemic, as growth in expenses outpaced growth in revenues and volumes, according to the t on hospital finances from Kaufman Hall. 

“The increases were driven in part by a competitive labor market, as well as hospitals needing to rely on more expensive contract labor to meet staffing demands,” the report notes. “Increased lengths of stay due to a decline in discharges also negatively affected hospital margins.” 

Hospitals experienced negative operating margins for most of the year, with approximately half of the nation’s hospitals ending the year in the red. According to the report, hospitals’ expense pressures “are unlikely to recede in 2023.”