Vital Signs December 2023: Healthcare Sector Outlook

VITAL SIGNS

Hospital Budgets Under Stress: From a Challenging Landscape to a Pathway to Performance For hospital operating margins, 2022 was one of the most difficult years on record, and that trend looked to carry through this year as well. Healthcare systems around the country were beset with inflation, labor shortages, high contract labor costs, reduction in positive margin procedures, increase in negative margin procedures, along with vanishing federal support funding. This resulted in many systems reporting net losses in the billions during fiscal year 2022.

Major Health Systems – Recent Financial Performance Q1 2023

10% 15% 20% 25%

-2 -1.5 -1 -0.5 0 0.5 1 1.5 2

0% 5%

-25% -20% -15% -10% -5%

Operating Income $B (LHS)

Operating Margin % (RHS)

Source: Becker’s Hospital Review, The Advisory Board (and respective hospital systems), Cushman & Wakefield Research

VITAL SIGNS 2022: PERSPECTIVES ON HEALTHCARE AND MEDICAL OFFICE BUILDINGS