🏥 Health System 2024 Performance Visualized

Breaking down the top 50 health systems' operating margin performance in 2024 vs. 2023

PARTNERED WITH Happy Thursday Hospitalogists, Since I hit you with an absolute doozy of a send on Tuesday with lots of content and links, I figured I wouldn't stretch you further with anything crazy today. Instead I'll be sharing a visual for you guys that I put together around for-profit and nonprofit health system performance for the top 50 health systems by revenue.  Let's take a quick dive, and let me know your thoughts. Also, it took me a decent chunk of time to put together so I'd really appreciate a share if you find it valuable. Thanks fam.   Also - do me a favor and register for my upcoming virtual event here! Was this email forwarded to you? Subscribe Here SPONSORED BY SMARTERDX Your hospital delivered the care. So why aren't you getting paid for it? Between the sheer amount of data and your staff stretched thin, your CDI team can't review every diagnosis on every chart. SmarterPrebill™ by SmarterDx fills the gaps with clinical AI that scans every patient record before billing, spotting missed or incorrect diagnoses hidden from your team among the mountains of data The result is an accurate receipt of care — plus millions in recovered revenue (~$2M annually per 10,000 discharges) and higher quality scores (without disrupting workflows or adding headcount). SmarterPrebill™ helps hospitals get paid what they've already earned. Discover the power of AI. BLAKE'S BREAKDOWN Blake's Breakdown: The top health systems by operating margin, and visualizing expansion The below chart is sorted by total 2024 operating margin (calendar year (CY) ended December 31, 2024 - yes, I went through and added all of the partial half-year or quarter-year periods to those health systems with fiscal years ended in June) .   Green bars represent operating margin expansion. Orange bars represent operating margin contraction. The labels represent each health system's reported CY 2024 operating margin. (PS - if you spot any discrepancies, feel free to let me know).   Keep in mind that operating margin is calculated by subtracting all operating expenses from total revenue, so it leaves out non-operating items like marked-to-market investment gains from the massive endowments most of these systems manage.   Since this is a retrospective analysis, Hospitalogists know by now that health systems enjoyed broad-based recovery in 2024. But there are a few notable names that stick out here: Penn Medicine, Memorial Hermann, and Sentara Health.   I couldn't resist but peek into why Sentara saw such terrible performance in 2024 and it looks like the hit was almost entirely related to the Medicaid redeterminations process leading to issues on the health plan side. Oof. More of that to come in 2026 if ACA subsidies expire? Curious for thoughts on how those out there are thinking and/or planning for this possibility.   By the way - If you're part of ANY of these health systems and want to shed light on your system's 2024 performance, I'm all ears!   Look at all that green. Median operating margin from the names below hit 2.3% in 2024 - just about healthy enough, but most are still in recovery mode. On the positive side of margin expansion, we've already covered Fairview Health Services' turnaround and how that came to be (alongside broad macro tailwinds for health systems).   Other strong operating margin expanders include Tenet (largest margin given USPI ambulatory outperformance - I've normalized out their net gains on sales from their operating margin to get something that more closely resembles actual operating performance), Baylor, Piedmont in Georgia, UHS, and Novant with its recent acquisitions. Health System Comparative Scatterplot Analysis Our final slice of the data today is looking at a scatterplot comparing total operating margin to total net revenue growth. The horizontal axis line represents 10.3% annual revenue growth (the median for all health systems analyzed) while the vertical line represents 2.3% operating margin (also the median).   As you can see, most names fall near the middle (unfortunately I couldn't find a clean way to keep Sentara and BJC Healthcare on the grid). Novant stands out to me, as the health system saw major operating margin expansion and revenue growth in what I imagine to be driven by recent M&A and major demographic tailwinds in their markets. What else sticks out to you? SPONSORED BY PHRMA The patient paid full price or more. What does the hospital pay? The 340B program was designed to help vulnerable patients afford their medications, but its current structure and impact are debated.  Now, PhRMA argues that 340B operates more like a pricing loophole where some participants mark up drugs by over 1,000%, pocket the difference, and face little scrutiny.  PhRMA's article on Hospitalogy outlines their perspective and raises questions about oversight, transparency, and who ultimately benefits. 👉 Read PhRMA's take here. MISCELLANEOUS MADDENINGS That's it for this week! Thanks for reading and supporting Hospitalogy. Feel free to drop feedback or thoughts in the email replies anytime.   And finally, don't forget to register for my upcoming virtual event. It's gonna be a great one. Pranam and Regina are legendary and hold a wealth of experience and knowledge. Register here! Thanks for the read! Let me know what you thought by replying back to this email.   — Blake   Share Hospitalogy, Earn Rewards Have friends who'd love Hospitalogy too? Click the link below to share Hospitalogy with your friends and earn awesome rewards! PS: You have referred 0 people so far Share Hospitalogy! Get your brand in front of 43,000+ executives and healthcare decision-makers. Let's Partner 🏥 Hospitalogy Membership I'm building a community of leaders in strategy, finance, and ops at hospitals and health systems to help us connect, learn, and grow together. Join the movement here. Workweek Media Inc.  1023 Springdale Road, STE 9E Austin, TX 78721   Want to ruin my day? Unsubscribe.