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November 2018
Expense
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Expense by Region ?
Evaluating Total Expense per Adjusted Discharge, the South was the only region to perform below both budget and the prior year's performance. The Midwest and West were below prior year's actuals and greater than budget, while the Northeast/Mid-Atlantic and Great Plains were below budget and greater than 2017 actuals. Up until October, the majority of regions performed favorable to both their budgets and the prior year's performance, clustering and falling into the lower left quadrant. Other metrics at the regional level—with the exception of FTEs per AOB—continue to see scattered results shifting away from the lower left quadrant. Volume data related to all metrics and for all regions also were scattered. These observations indicate that regions all face large volume variations that are not reflected in their respective budgets. Applying static (or "average-based") budgeting methods and operational strategies to large variations will yield mixed, and largely inconsistent results. Accounting for patient volume variations in budgets will enable hospitals to increase operational consistency and improve cost management across regions, and to more favorably cluster together as they did during the summer months.
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
Nearly all expense metrics were unfavorable to budget and the prior year's performance, with the exception of Labor Expense per Adjusted Discharge, FTEs per Adjusted Occupied Bed (AOB), and Purchased Service Expense per Adjusted Discharge. It is normal to see Purchased Service Expense per Adjusted Discharge well below budget and prior year performance, as organizations typically do not engage third-party services as the holiday season draws near. Reviewing volume at the national level, Discharges, Average Length of Stay, and ED Visits were below both budget and the prior year—all of which are key drivers of favorable Labor Expense per Adjusted Discharge and FTEs per AOB. Total Expense per Adjusted Discharge and Drug Expense per Adjusted Discharge were only slightly unfavorable when compared to budget. The metric displaying the greatest unfavorable result was Supply Expense per Adjusted Discharge, indicating a general inability to accurately forecast what patient types will come into a hospital, and the complementary supplies needed to accommodate these patient types.
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
0.3%
(1.9%)
(0.5%)
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Labor Expense per Adj. Discharge
(1.9%)
(3.3%)
(4.0%)
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FTEs per AOB
(0.9%)
(2.8%)
(3.5%)
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Non-Labor Exp per Adj. Discharge
0.7%
(2.2%)
0.6%
non-labor.svg
Supply Expense per Adj. Discharge
2.8%
5.8%
4.1%
supply.svg
Drug Expense per Adj. Discharge
0.6%
2.3%
3.2%
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Purchased Service Exp per Adj. Discharge
(4.1%)
(6.5%)
(3.4%)
purchased.svg
By Region
By Bed Size
National Observations
Expense by Bed Size
Reviewing expense results by bed size reveals the same scattered results seen at the regional level for all expense metrics, with the exception of FTEs per AOB. FTEs per AOB for hospitals of all bed sizes were below the prior year's actuals, with the majority of hospitals also falling below budget. The exception were hospitals of 100-199 beds and 300-499 beds, which were above budget. Labor Expense per Adjusted Discharge was below budget and prior year actuals for all bed sizes due to a decrease in discharges at the national level. For Drug Expense per Adjusted Discharge, nearly all hospital sizes—except those with 500 or more beds—were above 2017 actuals. As also seen in Volume, Patient Days were above budget and the prior year's actuals, indicating higher than anticipated patient acuity. The impact of this also is seen in Supply Expense per Adjusted Discharge, as purchasing supplies based on the prior year's patient load and patient types likely was the popular budgeting method.
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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