Operating Margin
A hospital's profit margin from patient services — net operating income divided by total operating revenue.
Operating margin is the standard hospital profitability metric: (Operating Revenue − Operating Expenses) ÷ Operating Revenue. Hospitals with positive operating margins generate more from patient services than they spend; hospitals with negative operating margins rely on investment income, donations, or government subsidies to break even.
Industry benchmarks: pre-pandemic, the median U.S. hospital operating margin ran 2-4%. Post-pandemic (2022-2024), margins have been more variable — many systems have run negative for 2-3 consecutive quarters before stabilizing in 2024.
Distinguishing operating from total margin matters: hospitals with operating losses can still post positive total net income via gains on asset sales, investment performance, or settlements. The hcris.io "distress radar" looks specifically at operating margin trends to flag struggling hospitals.
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