Community hospitals are facing a considerable margin management challenge. Rapidly growing expenses—largely from rising labor costs—and declining revenue from reimbursement cuts and other market pressures are threatening financial health. In 2016, expense growth outpaced revenue growth at standalone hospitals. At the current pace, many community hospitals are rapidly approaching negative operating margins. Growth of labor expenses, which already account for over half of a community hospital’s operating costs, must be minimized to maintain future sustainability.
This research report diagnoses the key drivers behind rising labor expense at community hospitals and provides both tactics to control near-term labor spend and strategies for long-term financial sustainability.