Hospitals
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 2,500 hospitals in the US provide acute care and surgeries for patients on either a scheduled or emergency basis. Most hospitals are considered community hospitals, and are operated by non-profit, for-profit, or state or local government organizations.
Conflict with Insurers
While hospitals depend on private insurers for revenue, both groups struggle to agree on how best to treat patients.
Labor Shortages
Hospitals struggle with shortages of nurses, medical technicians, pharmacists, and other clinical workers.
Industry size & Structure
The average hospital employs about 2,000 workers and generates $480 million in annual revenue.
- There are about 2,500 hospital firms in the US with about $1.2 trillion in annual revenue and employing 4.9 million people.
- Most hospitals are considered community hospitals, and are operated by non-profit, for-profit, or state or local government organizations.
- A typical hospital has 100 to 300 beds and serves 5,800 to 11,200 patients annually.
- The largest US hospital companies include Hospital Corporation of America (HCA), Adventist Health, and Tenet Healthcare Corporation.
- The average length of stay in a hospital is 4-5 days.
- The average hospital occupancy rate in urban hospitals is about 62%, while the occupancy rate in rural hospitals is 37%.
- The majority of hospital employees are dedicated to patient care (doctors, nurses, aides and clinical workers). Other professions within a hospital are office/administrative support, cleaning and maintenance, management, food service, and community and social services.
Industry Forecast
Hospitals Industry Growth
Recent Developments
Dec 17, 2024 - Large Health Systems Have Fared Best Since Pandemic Ended
- Most large health systems have recovered or exceeded their pre-pandemic margins but small and rural hospitals continue to struggle with financial performance, according to Moody’s credit rating agency. Operating performance, as defined by revenue, gradually improved at the 50 largest US hospitals in 2023, with cash flow margins increasing from 5.1% to 5.7%. Annual operating revenue growth also increased for the largest hospitals, to 9.3%. It surpassed the 8.6% expense growth for the 50 largest hospitals, reversing the trend from 2022. The 50 smallest Moody’s rated hospitals saw operating cash flow margin continue to decrease from 3.2% to 2.9%. And 68% of the 50 smallest hospitals reported an operating deficit—evidence of the ever-growing gap between large and small hospitals. This cohort of smallest hospitals and health systems had a median number of maintained beds of 283 and median revenues of $478 million.
- Hospital consolidation is accelerating as the high cost of technology makes consolidation a more practical move, according to Becker's Hospital Review. Rising costs, staffing challenges, and the need for scale to stay competitive are also key drivers of consolidation. Large systems with scale and stability seek opportunities to expand responsibly by acquiring distressed facilities and entering markets where other systems are exiting, according to Becker’s Hospital Review. Larger systems spread expenses, enhance services, and improve efficiency across their networks. Many systems see geographic diversification as a long-term benefit in the ongoing consolidation trend.
- National health spending totaled $4.5 trillion in 2022, accounting for 17% of gross domestic product (GDP), according to health policy research firm KFF. Health spending is projected to increase faster than GDP through 2032. One or two health systems controlled the entire market for inpatient hospital care in nearly half (47%) of metropolitan areas in 2022. One or two health systems controlled more than 75% of the market in 82% of metropolitan areas. Nearly all (97%) of metropolitan areas had highly concentrated markets for inpatient hospital care when applying Herfindahl-Hirschman Index thresholds from antitrust guidelines to MSAs.
- Hospitals slightly increased their prices during the first 10 months of 2024, according to the US Bureau of Labor Statistics (BLS). Hospital industry employment and average wages for nonsupervisory employees increased slightly during the first 10 months of 2024, according to the BLS.
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