University of Michigan Health Misses 2023 Target Operating Margin

Continued financial stress, post COVID.  But never fear, next year will be better!

https://www.beckershospitalreview.com/finance/u-of-michigan-health-projects-0-7-operating-margin-for-2024-misses-2023-target.html

U of Michigan Health projects 0.7% operating margin for 2024, misses 2023 target
Nick Thomas - June 16, 2023

Ann Arbor-based University of Michigan Health is expecting a lower-than-expected operating margin on revenues of $5.9 billion for fiscal 2023, according to a June 15 The University Record report.

Labor shortages and inflationary pressures ensured the system was unable to meet its operating margin target, said David Miller, MD, president of the system, speaking at a board of regents meeting. The April closing of the merger with Lansing, Mich.-based Sparrow Health was not included in the forecast for the fiscal year, which ends June 30.

Though the target was not met, it will not prevent University of Michigan Health from progressing with capital plans, which include the construction of a new 264-bed patient hospital expected to open in late 2025, the report said.

The board meeting also set a 0.7 percent opening margin target for fiscal 2024 to include the Sparrow Health tie-up, according to the report. The two systems are projected to be a $7 billion healthcare organization with over 200 sites of care.

Even their 2024 projection is pretty thin.  If I understand what they are saying correctly, they are only forecasting a $ 49 million operating margin in 2024. This is about one medical liability settlement, or the purchase of on medium sized medical practice.