Hospital expenses, particularly for labor, continue to be high amid widespread staffing shortages. However, even as hospitals struggle to attract and retain staff, some are cutting jobs as their economic conditions continue to worsen.
According to a new Syntellis report, hospital margins rose year-over-year (YOY) in January by 3.7 percentage points, the first increase YOY since December 2021. Gross operating revenue has also increased 10.1% YOY, largely due to an 18.7% increase in outpatient revenue.
However, hospital expenses, particularly for labor, continue to be high amid growing inflation and persistent staff shortages.
Nationwide, ED labor expenses have jumped around 50% since the pandemic began, even as ED volumes have declined overall. By region, hospitals in the West have seen the largest increase ED labor expenses between January 2020 and January 2023 at 52.4%.
According to Syntellis, the rise in overall ED labor costs was largely driven in increases median hourly wages for RNs. For both employed and contract RNs, the median hourly rate was $42.24 nationwide in January, up 4% from January 2022 and 19% from January 2020.
In a separate report, Syntellis and the American Hospital Association found that contract labor costs have surged 258% between 2019 and 2022 as labor shortages pushed hospitals into relying more heavily on contract staffing firms to meet patient demand.
During that same time, contract labor full-time equivalents increased 139%, and the median wage paid to contract staffing increased by 57%.
"Our data from the first month of 2023 indicates this will be another challenging year for the healthcare industry," said Steve Wasson, EVP and general manager for data and intelligence solutions at Syntellis. "High labor costs are the new normal for the nation's hospitals, as illustrated by escalating labor expenses in emergency departments nationwide. Ongoing labor shortages have only exacerbated long-running staffing issues in EDs, driving up hourly rates for nurses and other ED labor costs."
According to Bloomberg, the financial and healthcare sectors are likely to see large-scale layoffs in the near future, similar to how the tech industry has laid off thousands of workers in the last few months. In particular, 10 healthcare companies on the S&P 500 are both underperforming compared to the rest of the market and have declining earnings per employee.
A new report from Challenger, Gray & Christmas found that U.S. employers cut 77,770 jobs in February. Although this was a 24% decrease from the number of jobs cut in January, it was also 410% higher than the number of cuts announced in February 2022.
In February, the healthcare industry saw 9,749 job cuts, the second-most cuts across 30 different industries. Since the beginning of the year, there have been 16,482 healthcare job cuts, an 85% increase from the 8,928 cuts that occurred during first two months of 2022.
"While many hospitals are still struggling to retain and attract staff, others are cutting costs as economic conditions continue to soften. Meanwhile, manufacturers of healthcare products are dealing with the increasing costs of doing business, and cutting back staff," Challenger, Gray & Christmas said. (Syntellis Healthcare Performance Trends report, accessed 3/10; Syntellis news release, 3/9; AHA News, 3/8; Syntellis/AHA report, accessed 3/10; Gooch, Becker's Hospital Review, 3/9; Challenger, Gray, & Christmas report, 3/9; Webb, Bloomberg, 3/10)
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