No group may be more eager to say ‘goodbye’ to 2022 than U.S. hospitals. 2022 is projected to be the worst year for hospital margins since the beginning of the pandemic. According to the KaufmanHall Fall 2022 report, hospital margins are projected to close out the year 37% below pre-pandemic levels (KaufmanHall, 2022). “Hospital operating margins are on average negative and have been negative for nearly a year now,” explained Mark Van Sumeren, Managing Director of Health Industry Advisor, LLC. “It’s draining their cash reserves and a lot of them use their investment income as a backstop. Given what’s going on in the market these days, that’s providing no relief.”

However, where there are challenges there are also opportunities. “What this means for anybody serving or supplying providers is clearly the margin pressure leads to price considerations, but an equally important issue is providers simply don’t have the staff to do things that they would have otherwise done themselves,” Van Sumeren concluded. “That opens an opportunity for suppliers. It will influence every trading partner in terms of how they deal with their health systems customers for at least the next year, probably the next several years.”

By focusing on this opportunity, trends begin to emerge on how health systems and medical device companies will work together next year.