By Dave Muoio / May 12, 2022
Hospitals across the country have seen their per-patient labor expense increase by more than a third since 2019, largely due to the spike in contract labor prices during the delta and omicron surges, Kaufman Hall reports.
Between 2019 and March 2022, the median labor expense per adjusted discharge rose 37% from $4,009 to $5,494, the firm wrote in a new report, citing monthly data from over 900 hospitals polled by Syntellis Performance Solutions.
“The pandemic made longstanding labor challenges in the healthcare sector much worse, making it far more expensive to care for hospitalized patients over the past two years,” Erik Swanson, senior vice president of data and analytics at Kaufman Hall, said in a statement. “Skyrocketing labor costs, decreasing patient volume and lower revenues create a perfect storm for steep declines in profit margins. Hospitals now face a number of pressures to attract and retain affordable clinical staff, maintain patient safety, deliver quality services and increase their efficiency.”
Per-patient labor expense increases were seen across each area of the country but were most noticeable in the South (43% increase) and the West (42% increase), Kaufman Hall wrote. These expenses were consistently highest in the Northeast/Mid-Atlantic and the West, the latter of which supplanted the former as the priciest labor region in 2021.
While Kaufman Hall cited reports on nurses and other healthcare workers departing the industry as a contributing factor in the expense increases, the firm placed primary blame for the spending trends on contract labor utilization and pricing.