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National Daily Hospital

Executive Briefing

Tuesday November 18th, 2025

Today: Large vs Small Hospital Margins Diverge; Margins Softening; Flow Incentives and Margin Tied Together in High Performing Hospitals; ED Throughput Best Practices Case Study

Hospital Margin, Revenue, and Expense Management

News – Margin gap between top and bottom hospitals keeps widening.
A recent Kaufman Hall flash report summarized by Healthcare Finance News finds that U.S. hospitals’ adjusted year-to-date operating margin is about 2.9%, but performance is highly uneven, with a widening gap between financially strong systems and those struggling with volume, payer mix, and expenses.
https://www.healthcarefinancenews.com/news/financial-performance-gap-widens-between-top-bottom-hospitals-report-finds
News – Margins softening again as expenses catch up.
HealthLeaders reports that the median calendar year-to-date operating margin index declined to 1.7% in late 2025 as labor, supply, and drug costs continued to climb, eroding earlier 2025 gains and exposing hospitals with thin cash reserves and weaker commercial mix.
https://www.healthleadersmedia.com/ceo/hospital-margins-softening-expenses-catch
News – Hospitals show improved financial performance in 2025, but challenges persist.

A new ACDIS financial performance analysis reports that U.S. hospitals experienced positive financial developments in early 2025, driven by higher patient volumes and improved revenues, yet many facilities—particularly smaller and resource-limited hospitals—continue to face significant pressure from labor costs, inflation, and payer reimbursement challenges, underscoring ongoing vulnerability in rural and critical-access settings.
https://www.acdis.org/articles/news-us-hospitals-see-positive-financial-developments-2025-challenges-remain-report-says

News – Sector-wide finances improved earlier in 2025 but remain fragile.
Healthcare Dive, summarizing an earlier Kaufman Hall report, notes that hospital operating performance from January–April 2025 was 6% higher year-to-date compared to 2024 due to volume growth and service demand, but warns that payer pressure and ongoing cost escalation could quickly reverse these gains.
https://www.healthcaredive.com/news/hospital-financial-performance-improves-april-2025-kaufman-hall/750339/
Recommendation – Tie flow and LOS improvements directly to financial plans.
Leadership presentations from Kaufman Hall and hospital associations increasingly emphasize that LOS reduction, better bed placement, and fewer avoidable observation/“boarding” days should be treated as core financial strategies, not just clinical operations projects, because they unlock capacity for higher-margin services and reduce overtime and contract labor.
https://www.haponline.org/Portals/1/docs/Events-and-Education/2025-Leadership-Summit/8SamarisKaufmanHallSlides.pdf

Case Study – State-level throughput incentives in Maryland (New Case Study).
Maryland’s HSCRC ED-Hospital Throughput Best Practices collaborative ties hospital incentives and potential revenue at risk to improvements in ED length of stay, inpatient throughput, and discharge processes, using a tiered set of best practices (interdisciplinary rounds, bed capacity alerts, surge huddles, and post-acute coordination) as scoring criteria.
https://hscrc.maryland.gov/Documents/Best%20Practices%20Meeting%20Jan%2030%2C%202025.pdf

Hospital Inpatient Throughput, ED Throughput, and Bed Placement

News – Multi-year project shows sustained gains in discharges before noon.
A 2024 BMC Health Services Research study of an academic medical center’s multi-year patient flow project reports that a bundle of interventions (standardized discharge planning, leadership discharge rounds, and secure-chat coordination) significantly increased discharges before noon and improved bed availability for admitted patients.
https://bmchealthservres.biomedcentral.com/articles/10.1186/s12913-024-10960-x
Case Study – Multidisciplinary throughput initiative boosts morning discharges (New Case Study, may require subscription).
A 2025 quality improvement study in The Joint Commission Journal on Quality and Patient Safety found that a multidisciplinary throughput program increased discharge orders before 9 a.m. from 4% to 16% and patient discharges before 11 a.m. from 7% to 19%, without harming readmission rates, by hard-wiring early rounding and discharge planning. (may require subscription)
https://journals.lww.com/pqs/fulltext/2025/03000/enhancing_hospital_throughput__a_multidisciplinary.1.aspx
Case Study – Discharge rounds improve patient flow and outcomes (New Case Study).
A 2025 Cureus article describes how structured daily discharge rounds involving nursing, case management, physicians, and bed coordination reduced overall hospital length of stay and improved flow metrics, though the authors caution that results depend on careful design and sustained leadership involvement.
https://www.cureus.com/articles/411707-impact-of-discharge-rounds-on-patient-flow-and-hospital-outcomes
Case Study – Investing in a “discharge by noon” coordinator role (New Case Study, may require subscription).
A 2024 study in Hospital Pediatrics reports that adding a dedicated role focused on timely morning discharges increased discharges before noon from 19% to approximately 30% on a pediatric hospital medicine service, demonstrating that focused roles can move key throughput metrics when supported by physician and nursing leadership. (may require subscription)
https://publications.aap.org/hospitalpediatrics/article/15/1/9/200314/Investing-in-a-New-Role-to-Increase-Timely-Morning
Case Study – Split-flow model reduces ED wait times and improves throughput.
A Sound Physicians case study describes how a southeast medical center implemented a split-flow ED model (rapid-care zone with increased nursing support), resulting in faster door-to-clinician times, reduced ED length of stay, and fewer patients leaving without treatment, while also improving patient satisfaction scores.
https://www.soundphysicians.com/case-study/split-flow-model-reduces-ed-wait-times-and-throughput/
News – ED overcrowding colliding with bed loss and rising inpatient days.
A 2025 Vizient analysis highlights that U.S. EDs are seeing record demand (about 139.8 million ED visits in 2024, or 42.7 visits per 100 people), while nearly 30,000 hospital beds have been eliminated nationally since 2019; Sg2’s 2025 forecast projects a 5% increase in inpatient utilization and a 10% rise in inpatient days over the next decade, amplifying the urgency for robust throughput and bed placement strategies.
https://www.vizientinc.com/insights/all/2025/from-every-angle-emergency-department-overcrowding
Recommendation – Use standardized best-practice bundles for flow and bed placement.
Maryland’s HSCRC throughput work, Epic’s patient-flow analytics playbook, and multi-site QI collaboratives suggest that combining daily interdisciplinary rounds, standardized discharge criteria, bed-capacity alerts, and real-time dashboards is more effective than isolated projects in lowering LOS and reducing ED boarding.
https://hscrc.maryland.gov/Documents/Best%20Practices%20Meeting%20Jan%2030%2C%202025.pdf
https://www.epicshare.org/share-and-learn/rethinking-patient-flow

Early Morning Briefing Highlights

Margins remain razor-thin and volatile.
National hospital operating margins hover in the low single digits, with a median YTD margin around 2–3% and signs of softening as expenses catch up, while the gap between high- and low-performing hospitals continues to widen.
https://www.healthcarefinancenews.com/news/financial-performance-gap-widens-between-top-bottom-hospitals-report-finds
https://www.healthleadersmedia.com/ceo/hospital-margins-softening-expenses-catch
Size and scale matter more than ever.
Large hospitals are driving much of the profitability improvement in 2025, while very small hospitals (under 25 beds) are slipping into negative margins, reinforcing concerns about rural and critical-access sustainability.
https://www.acdis.org/articles/news-us-hospitals-see-positive-financial-developments-2025-challenges-remain-report-says

Flow and LOS are now central financial strategies, not side projects.
State-level programs, national collaboratives, and hospital QI studies show that sustained gains in discharge before noon, improved discharge rounds, and stronger bed coordination can meaningfully reduce LOS and open capacity.
https://bmchealthservres.biomedcentral.com/articles/10.1186/s12913-024-10960-x
https://www.cureus.com/articles/411707-impact-of-discharge-rounds-on-patient-flow-and-hospital-outcomes
ED overcrowding is on a collision course with reduced bed supply.
ED volumes are projected to grow another 5% over the next decade, inpatient days 10%, and roughly 30,000 hospital beds have already been removed from the system since 2019, making bed placement and discharge timing critical to both patient safety and financial viability.
https://www.vizientinc.com/insights/all/2025/from-every-angle-emergency-department-overcrowding
Throughput best practices are increasingly tied to incentives.
Maryland’s HSCRC, other state initiatives, and payer contracts are starting to link revenue and incentives to ED LOS, bed-capacity management, and adoption of standardized flow practices, signaling that throughput is becoming a regulated performance domain.
https://hscrc.maryland.gov/Documents/Best%20Practices%20Meeting%20Jan%2030%2C%202025.pdf

Strategic Implications for Leadership

Treat margin and throughput as a single strategy, not separate workstreams.
Given thin and softening margins, every additional avoidable inpatient day, boarded ED patient, or delayed admission represents real missed revenue and additional cost; finance and operations should jointly own a “capacity and margin” dashboard that tracks LOS, bed utilization, and ED boarding alongside operating margin.
https://www.healthcarefinancenews.com/news/financial-performance-gap-widens-between-top-bottom-hospitals-report-finds
https://www.healthleadersmedia.com/ceo/hospital-margins-softening-expenses-catch
Prioritize high-impact, low-capital throughput interventions.
Multi-year evidence shows that standardized discharge rounds, early discharge orders, and “discharge by noon” programs can increase morning discharges from roughly 7–19% or 19–30% without major capital investment — making them ideal targets in tight budget environments.
https://bmchealthservres.biomedcentral.com/articles/10.1186/s12913-024-10960-x
https://www.cureus.com/articles/411707-impact-of-discharge-rounds-on-patient-flow-and-hospital-outcomes
https://publications.aap.org/hospitalpediatrics/article/15/1/9/200314/Investing-in-a-New-Role-to-Increase-Timely-Morning
Link ED flow redesign to inpatient bed management.
ED split-flow models, rapid-care zones, and door-to-clinician improvements will stall without parallel work on inpatient bed placement and discharge; governance structures should explicitly connect ED, hospital medicine, nursing leadership, and case management under one patient-flow steering committee.
https://www.soundphysicians.com/case-study/split-flow-model-reduces-ed-wait-times-and-throughput/
https://www.vizientinc.com/insights/all/2025/from-every-angle-emergency-department-overcrowding
Use external benchmarks to calibrate urgency and investment.
Comparative analytics from Vizient, Epic, state collaboratives, and Kaufman Hall can show how your LOS, discharge-before-noon rate, ED LOS, and margins stack up against peers — providing a fact base to justify investment in flow teams, analytics, and staffing models.
https://www.vizientinc.com/insights/all/2025/from-every-angle-emergency-department-overcrowding
https://www.epicshare.org/share-and-learn/rethinking-patient-flow
https://www.haponline.org/Portals/1/docs/Events-and-Education/2025-Leadership-Summit/8SamarisKaufmanHallSlides.pdf

Plan explicitly for rural and small-hospital vulnerability.
Boards and system leaders should recognize that hospitals under 25 beds are at particular financial risk; system-level strategies may include shared flow resources, centralized bed management, tele-hospitalist support, and targeted subsidy or transformation planning for the smallest facilities.
https://www.acdis.org/articles/news-us-hospitals-see-positive-financial-developments-2025-challenges-remain-report-says

Quality Metrics to Share with Your Team (≤ 7)

Adjusted year-to-date hospital operating margin (national flash report).
Recent national flash data show an adjusted YTD operating margin of about 2.9%, with strong variation by hospital type and market.
https://www.healthcarefinancenews.com/news/financial-performance-gap-widens-between-top-bottom-hospitals-report-finds
Median calendar YTD margin softening to 1.7%.
By late 2025, median calendar year-to-date operating margin dropped to 1.7%, suggesting that earlier 2025 financial improvements are eroding as expenses rise.
https://www.healthleadersmedia.com/ceo/hospital-margins-softening-expenses-catch
Large vs very small hospitals.
Hospitals with 300–499 beds saw margin growth of more than 30%, while hospitals under 25 beds have dipped into negative margins, underscoring the vulnerability of very small and rural facilities.

Early discharge gains from throughput projects.
In a multidisciplinary throughput initiative, discharge orders before 9 a.m. increased from 4% to 16%, and discharges before 11 a.m. from 7% to 19%, without adverse readmission impact. (may require subscription)
https://journals.lww.com/pqs/fulltext/2025/03000/enhancing_hospital_throughput__a_multidisciplinary.1.aspx
Pediatric discharge-by-noon improvement.
A pediatric QI project increased discharges before noon from 19% to around 30% by investing in a dedicated discharge-coordination role and aligning medical staff practices. (may require subscription)
https://publications.aap.org/hospitalpediatrics/article/15/1/9/200314/Investing-in-a-New-Role-to-Increase-Timely-Morning
Beds removed and projected demand.
Since 2019, nearly 30,000 hospital beds have been eliminated nationwide; Sg2’s 2025 forecast projects a 5% increase in inpatient utilization and a 10% increase in inpatient days over the next decade.
https://www.vizientinc.com/insights/all/2025/from-every-angle-emergency-department-overcrowding
Impact of structured discharge rounds.
A 2025 study of structured discharge rounds found that well-designed multidisciplinary rounds can reduce LOS and improve flow, though poorly implemented versions may not deliver benefits, emphasizing the importance of design and leadership backing.
https://www.cureus.com/articles/411707-impact-of-discharge-rounds-on-patient-flow-and-hospital-outcomes

Leadership Call to Action (≤ 5)

Stand up or refresh a hospital-wide Patient Flow Steering Committee.
Charter a cross-functional team (CFO, CMO, CNO, ED and hospital medicine leaders, case management, bed management, IT/analytics) to own LOS, discharge-by-noon, ED LOS, and boarding as enterprise-level targets, linked to margin and access.
Launch a 90-day “Morning Discharge” sprint.
Use evidence-based tactics — early discharge orders, structured discharge rounds, and possibly a dedicated discharge-coordination role — to increase discharges before noon by at least 5–10 percentage points, with weekly measurement and feedback.
Implement or strengthen ED split-flow and bed placement coordination.
Pair a split-flow or rapid-care model in the ED with improved inpatient bed allocation and surge huddles so that door-to-clinician time, ED LOS, and left-without-treatment rates all move in the right direction.
https://www.soundphysicians.com/case-study/split-flow-model-reduces-ed-wait-times-and-throughput/
Create an integrated “Capacity & Margin” dashboard.
Combine financial indicators (operating margin, payer mix, contract labor spend) with flow metrics (LOS, discharge-by-noon, ED LOS, boarding hours, blocked beds) and review this monthly with the executive team and quarterly with the board.
https://www.vizientinc.com/insights/all/2025/from-every-angle-emergency-department-overcrowding
https://www.haponline.org/Portals/1/docs/Events-and-Education/2025-Leadership-Summit/8SamarisKaufmanHallSlides.pdf

Develop a specific strategy for small and rural hospitals in your system or region.
If you operate or depend on hospitals under 25 beds, develop a targeted plan for them (shared services, tele-support, transformation funding, or alternative models) so negative margins in the smallest facilities don’t compromise access for entire communities.