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January 2019
Expense
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Expense by Region ?
Evaluating Total Expense per Adjusted Discharge, the South and Great Plains were the only regions to perform above budget. All regions, with the exception of the South, performed at or above the prior year's actuals. The West and Midwest regions performed above both budget and prior year's actuals. With the exception of Labor Expense per Adjusted Discharge and FTEs per AOB, the other expense metrics by region were largely scattered. The performance of all regions regarding FTEs per AOB is impressive to note. Most regions were right at both budget and prior year's actuals, while the West was far greater than the prior year. Although not applicable every month, it appears that for December, the prior year's actuals were adequate when creating a budget for most regions. This intuitively makes sense, as hospitals expect and plan to see the most surgeries, most inpatients, and so forth during this period, as patient insurance is supported by a calendar year cycle.
Labor
Non-Labor
Supply
Drug
Purchased Service
FTE/AOB
Labor Expense
Non-Labor Expense
Supply Expense
Drug Expense
Purchased Service Expense
FTE per AOB
National Expense Observations
When compared to budget, all expense metrics, with the exception of Drug Expense per Adjusted Discharge, performed unfavorably above budget. For the fourth consecutive month, Total Expense per Adjusted Discharge performed unfavorable to budget, and for the third time out of the previous four months, Total Expense per Adjusted Discharge performed unfavorable to the prior year's actuals. Only Labor Expense per Adjusted Discharge, Full Time Equivalents (FTEs) per Adjusted Occupied Bed (AOB), and Purchased Service Expense per Adjusted Discharge performed favorably compared to the prior year’s actuals. Similar to November, patient volumes—for the most part—were below both budget and the prior year's actuals at the national level. Referring to the whisker plot for Average Length of Stay in the Volume section, the upper bound was about 35 percent, compared to about 31 percent in November. In all previous months, the upper bounds rarely exceeded 20 percent, and while discharges were down in recent months, Length of Stay is coasting well above the median. The challenge is aligning expenses to high variances in volume. Organizations typically budget to an average and/or median, and are unable to flex appropriately when a particular measure is performing above or below those levels for a considerable amount of time.
Unless noted, figures are Actuals and Medians
Budget Variance
Month Over Month
Year Over Year
Year Over Year Distributions
(Click to enlarge)
Total Expense per Adj. Discharge
1.8%
(1.9%)
1.8%
total_expense_per_adj_discharge.svg
Labor Expense per Adj. Discharge
3.4%
1.7%
(1.1%)
labor_expense_per_adj_discharge.svg
FTEs per AOB
0.5%
2.0%
(0.6%)
fte_per_aob.svg
Non-Labor Exp per Adj. Discharge
3.1%
(3.5%)
2.6%
non_labor.svg
Supply Expense per Adj. Discharge
2.3%
(3.9%)
7.3%
supply.svg
Drug Expense per Adj. Discharge
(3.8%)
(8.9%)
2.2%
drug.svg
Purchased Service Exp per Adj. Discharge
0.8%
(3.5%)
(0.4%)
purchased_service.svg
By Region
By Bed Size
National Observations
Expense by Bed Size
Similar to Total Expense per Adjusted Discharge at the regional level, Total Expense per Adjusted Discharge displays most organizations performing unfavorably to budget and the prior year's actuals. The two outliers within this metric were hospitals with 300-499 beds, and 500+ beds—those cohorts performed favorably to budget, and 300-499 bed hospitals also performed favorable to the prior year's actuals. When compared to budget, Labor Expense per Adjusted Discharge displayed favorable performance for hospitals of 300-499 beds and 500+ beds. While both of those cohorts performed favorable to budget, they performed above the prior year's actuals. This demonstrates very sound budgeting practices for these larger hospitals, as it indicates that they did not completely rely on the prior year's performance to forecast the next year's performance during the budgeting process.
Labor
Non-Labor
Supply
Drug
Purchased Service
FTE/AOB
Labor Expense
Non-Labor Expense
Supply Expense
Drug Expense
Purchased Service Expense
FTE per AOB
By Region
By Bed Size
National Observations
©2018 Kaufman, Hall & Associates, LLC
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