Hospital employment is down approximately 100,000 from pre-pandemic levels, while hospital labor expenses per patient through 2021 were more than 19% higher than pre-pandemic levels. (Photo: Shutterstock) A new report from the American Hospital Association highlights the financial and operational toll the pandemic and inflation has taken on hospitals — concluding that more than one-third are operating on negative margins.
"Hospitals and health systems have been nimble in responding to surges in COVID-19 cases throughout the pandemic by expanding treatment capacity, hiring staff to meet demand, acquiring and maintaining adequate supplies and personal protective equipment to protect patients and staff, and ensuring that critical services and programs remain available to the patients and communities they serve," notes the nine-page report released this month. "However, these and other factors have led to billions of dollars in losses over the last two years for hospitals."
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The report, "Massive Growth in Expenses and Rising Inflation Fuels Continued Financial Challenges for America's Hospitals and Health Systems," cites data from Kaufman Hall, a consulting firm that tracks hospital financial metrics, that reveals total hospital expenses were up 11% at the end of 2021, compared to pre-pandemic levels in 2019.
Other findings of the report include the following:
- Hospital employment is down approximately 100,000 from pre-pandemic levels, according to the Bureau of Labor Statistics, while hospital labor expenses per patient through 2021 were more than 19% higher than pre-pandemic levels.
- An increased reliance on contract staff (especially nurses) has driven labor expenses. According to the AHA, hospitals spent a median of 4.7% of their nurse labor expenses for contract travel nurses in 2019; that median was 38.6% as of January 2022.
- At the same time, contract staff agencies have increased their rates. The ASA notes "hourly billing rates that hospitals pay staffing firms for contract employees have increased 213% compared to pre-pandemic levels and led to a 62% profit margin for contract staff agencies."
- Drug expenses and medical supply expenses have increased, too, between pre-pandemic levels and now.
"With additional [COVID-19] surges potentially on the horizon, the massive growth in expenses is unsustainable," the AHA concludes, making a plea for additional federal support. "Most of the nation's hospitals were operating on razor-thin margins prior to the pandemic, and now, many of these hospitals are in an even more precarious financial situation. Regardless of potential new surges of COVID-19, hospitals and health systems continue to face workforce retention and recruitment challenges, supply chain disruptions, and exorbitant expenses."
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