Health industry employee benefit costs up 14.6% since 2004
- Healthcare employers are spending nearly 15% more on employee benefits and wellbeing than they did 15 years ago, according to an analysis by Bay Alarm Medical.
- The Bay Alarm subsidiary looked at Bureau of Labor Statistics data from the National Compensation Survey's Employer Costs for Employee Compensation report to see how much different industries were investing in insurance plans, retirement and savings, sick leave, vacation, overtime and other perks.
- In healthcare, the cost of benefits per employee was $10.24 per hour or $21,364 annually in 2018 — a 14.6% increase from 2004.
The findings underscore the financial pressures hospitals and health systems face with rising labor costs, shrinking volumes, lower reimbursements and declining operating incomes.
In a 2018 Healthcare Financial Management Association/Navigant survey, 78% of healthcare leaders predicted their organization's labor budget would grow over the next 12 months and 18% said the increase would be more than 5%.
In the same survey, 44% of leaders said they are targeting labor expenses to bring down operating costs. Other targets included purchased services and supply chain efficiencies.
Meanwhile, healthcare workers at organizations across the country are demanding higher wages and better medical benefits.
In December, Kaiser Permanente canceled some nonessential surgeries after nurses joined a picket line of 4,000 mental health workers who were protesting outsourcing at the health system. The previous month saw 300 nurses at Indiana Regional Medical Center in western Pennsylvania strike over benefits and wages. The hospital barred the striking nurses from returning to work for a week after paying $1.5 million for temporary replacement nurses to fill in during their absence.
Large employers were hit hardest by health insurance, according to the analysis. That stands to reason because the Affordable Care Act requires businesses with more than 50 full-time employees to offer health insurance.
Organizations of all sizes can rein in costs by not bearing the full cost of benefits, making employees aware of these costs, providing only benefits that are wanted or needed and avoiding sloppy recordkeeping, Bay Alarm Medical says.