- Hospitals nationwide struggle with escalating expenses exacerbated by widespread labor shortages and supply chain challenges.
- This landscape made hospitals’ labor spent per patient increase by more than a third since 2019.
- Between 2019 and March 2022, the median labor expense per adjusted discharge rose from $4,009 to $5,494.
According to a Kaufman Hall report, hospital labor expenses increased by more than one-third from pre-pandemic levels nationally. Between 2019 and March 2022, the median labor expense per adjusted discharge rose from $4,009 to $5,494.
The ongoing use of contract labor amid shortages driven by heightened turnover was a key factor executives cited for higher costs. The report also added that contract labor increased at least two times pre-pandemic levels in all regions.
Here are some other key labor findings included in the report:
- The largest increases were in the South (43% increase) and West (42% increase). The highest expense levels consistently were in the West and Northeast/Mid-Atlantic.
- As of March 2022, the median wage rate for contract nurses rose to over three times that of employed nurses.
- Contract labor as a percentage of total labor expenses increased more than five times the rate from pre-pandemic levels.
- In the first three months of 2022, hospitals saw dramatic declines in YTD (Year to Date) operating margin due to financial pressures attributed to the COVID-19 effects.
According to Kaufman Hall’s Senior Vice President of Data and Analytics, Erik Swanson, the labor challenges in the healthcare industry caused by the pandemic made caring for hospitalized patients much more expensive over the past two years.
“Skyrocketing labor costs, decreasing patient volume and lower revenues create a perfect storm for steep declines in profit margins. Hospitals now face several pressures to attract and retain affordable clinical staff, maintain patient safety, deliver quality services, and increase efficiency”, Swanson said.
In the report, Kaufman Hall explained that healthcare leaders must take a multi-level approach to tackling the workforce shortages and higher rates weighing down their bottom lines. The study used data over the last three years, sampled from more than 900 hospitals monthly from Syntellis Performance Solutions.
Stay tuned for this and more industry news through our May 2022 newsletter. Subscribe to our monthly newsletter and our Health Prime Blog for ongoing leading industry medical practice articles and policy updates.
Resources
A Special Workforce Edition of the National Hospital Flash Report | Kaufman Hall
Hospital labor expenses up 37% from pre-pandemic levels in March | Healthcare Dive
Hospitals’ per patient labor spend increased 37% from 2019 to Q1 2022 (fiercehealthcare.com)
