New Report Shows Rising Expenses in Hospitals and Health Systems

Jan. 9, 2024
Workforce shortages: labor expenses increase per report by Syntellis and the AHA

Hospital Vitals,” a report commissioned by the Chicago- and Washington-based American Hospital Association (AHA) and executed by Syntellis Performance Solutions headquartered in Chicago, show growing expenses stimulated by workforce shortages. The AHA expresses their concern about this new trend of rising expenses: “Intense competition for qualified health care professionals combined with steep inflation and other economic forces have caused many organizations to raise salaries and wages.”

The report on hospital financial and operational trends from the second quarter of 2022 states that median hourly pay for hospital workers increased to 14 percent compared to a pre-pandemic baseline of the first quarter of 2019. Data for the report was analyzed from a nationally representative sample of over 1,300 hospitals and health systems.

During the second quarter, according to the report, Labor Expense per Adjusted Discharge jumped 23 percent while Non-Labor Expense per Adjusted Discharge went up 15 percent. Compared to the first quarter of 2019, Total Expense was up 19 percent.

Labor expenses also rose due to the increase in the number of higher acuity patients needing a greater level of care.

Emergency Departments and nursing services saw the most significant increases in labor expenses. From the report: ED Labor Expense per Adjusted Discharge rose to 41 percent above the Q1 2019 baseline in Q2 2022 after peaking at 59 percent above the baseline during the Omicron surge the previous quarter. Access challenges at hospital outpatient facilities likely contributed to increased ED demand. Nursing Services Labor Expense per Adjusted Discharge was 35 percent above the baseline in Q2 2022, down from a high point of 58 percent above the baseline in Q1 2022.

Human Resources Labor Expense per Adjusted Discharge rose to 16 percent. With a 5 percent rise, the least increase was in Information Technology Labor Expense per Adjusted Discharge.

During the beginning of the COVID-19 pandemic in the first quarter of 2020, patient demand decreased significantly due to efforts to curb the virus’ spread. By the second quarter of 2020, Patient Days dropped -17 percent compared to the baseline of the first quarter of 2019. Discharges went down -21 percent, but Average Length of Stay (LOS) went up 2 percent.

Per the report, Patient Days had consistently higher increases relative to Discharges. This means greater LOS for patients, which more acuity cases and challenges in discharge can impact. Average LOS increased to its two-year high of 11 percent above the baseline with the Omicron surge in the first quarter of 2022 and went to 6 percent above the baseline in the second quarter. Patient Days decreased by -8 percent and Discharges by -14 percent.

The AHA is concerned about difficulties faced with increasing expenses: “While hospital expenses are increasing across both labor and non-labor areas, increases generally are highest for labor.”

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