Hospitals in the U.S. may have adapted well to the trying circumstances of the COVID-19 pandemic in order to treat patients and serve their communities, but the financial strain has been enormous. A recent report from the American Hospital Association, "Massive Growth in Expenses and Rising Inflation Fuels Continued Financial Challenges for America's Hospitals and Health Systems," revealed that total hospital expenses were up 11% at the end of 2021, compared to 2019 pre-pandemic levels. Chief among the expenses incurred during that time was an increase in contract staff agency rates. As more and more hospitals relied on contract travel nurses, spending a median of 38.6% for nurse labor expenses as of January 2022 compared to 4.7% in 2019, hourly billing rates for contract employees increased 213%, the report said.

"With additional [COVID-19] surges potentially on the horizon, the massive growth in expenses is unsustainable," the AHA concluded. "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."

Those margins will continue to be thin in particular for nonprofit hospitals: A new report from Fitch says the median operating margin for nonprofit hospitals is now 0.2%—a situation made even bleaker by having less cash on hand than in the previous year.

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Richard Binder

Richard Binder, based in New York, is part of the social media team at ALM. He is also a 2014 recipient of the ASPBE Award for Excellence in the Humorous/Fun Department.