Children’s Hospital of Philadelphia just had its smallest operating margin in at least 10 years

The Children’s Hospital of Philadelphia recorded its smallest operating profit margin in at least 10 years during the nine months that ended March 31, according to an Inquirer analysis of the not-for-profit health system’s financial results. That’s true even excluding federal COVID-19 aid during the pandemic.

CHOP said Thursday in a notice to municipal bond investors that its total revenue thus far in fiscal 2023 climbed to $3.05 billion, up 11% from a year ago, but its operating income fell 28% to $101 million.

Looked at another way: Revenue climbed $313 million, while expenses were up $353 million.

A spokesperson for CHOP did not provide a comment on the health system’s financial results.

Despite the narrowing of its operating profit margins, CHOP remains extraordinarily strong financially. The organization has huge cash reserves — enough to keep paying its expenses for 398 days without bringing in another dollar. It has little debt relative to its unrestricted assets.

Like the University of Pennsylvania Health System and Main Line Health, CHOP is seeing a recovery in patient demand for services, while also struggling to adjust to higher costs for labor, drugs, and other expenses.

Outpatient visits to CHOP doctors climbed to 1.2 million from a pandemic-era low of 906,922 in the same period of 2021. Inpatient admissions recovered to 25,506 in the nine-month period, from 18,132 two years ago.

CHOP staffed an average of 46 more inpatient beds so far this fiscal year, after the opening of a new hospital with 52 beds in King of Prussia in January 2022. CHOP’s occupancy rate remained very strong at nearly 92%.

CHOP has a total of 703 licensed beds, most of them at its main hospital in University City.