A new report has shed light on the financial health of US hospitals, showing a mix of positive and negative signals. Year-to-Date Margins Show Improvement: The median year-to-date operating margin for US hospitals rose to 5% in May 2024 from 0.7% in May 2023, indicating ongoing recovery. However, the rate of improvement has been modest, with only a slight increase from April. High Expenses Threaten Gains: Rising drug and supply costs are a major concern, with double-digit increases in expenses pushing overall non-labor costs up significantly. Revenue Growth Slows, But Remains Positive: While overall hospital revenue continues to grow, the pace has slowed, with outpatient revenue leading the growth. Patient Volumes Rise Across the Board: Inpatient admissions have seen a significant increase, along with growth in outpatient and emergency department visits. Physician Practices Face Pressure: Physician practices are also feeling the impact of rising expenses, with a double-digit growth in total direct expenses per physician FTE. As hospitals navigate these challenges, close monitoring of expenses and strategic cost-containment efforts will be crucial for long-term stability.