- Hospitals are experiencing a "massive surge" in expenses for items such as labor, drugs and supplies amid rising inflation, the American Hospital Association said in a report on Monday.
- Labor is a particular stressor, making up more than half of hospitals' total expenses. Overall, hospital labor expenses per patient increased almost 20% from 2019 to 2021, the AHA said.
- The powerful hospital lobby urged Congress to help address these headwinds by adding money to the provider relief fund and creating flexibility on advanced Medicare repayments, among other items.
In the report, the AHA warned the current trajectory for hospital expenses isn't sustainable. Given labor's outsized impact on hospitals' expenses, "even a slight increase in these costs can have significant impacts," the AHA said.
Prior to the pandemic, hospitals spent about 4.7% of labor expenses for nurses on contract travel nurses. That figure grew to about 39% in January, according to the report.
"The dramatic rise in costs of labor, drugs, supplies and equipment continue to put enormous pressure on our ability to provide care to our patients and communities," AHA President and CEO Rick Pollack said in the statement.
The pandemic has put an unprecedented toll on the nation's healthcare system, while much of the financial relief sent to hospitals was delivered before the two latest COVID-19 waves, according to the hospital lobby.
The strain has led to more than 33% of hospitals operating with negative margins, the group added.
In addition to labor costs, the report outlines how increased drug costs have weighed on hospital finances. Hospital drug costs were about 28% higher at the end of 2021 than before the pandemic, AHA said.
Supply costs also increased about 16% from pre-pandemic levels, according to the report. A previous report also flagged the rise in supply costs. Premier, a group purchasing organization, found that supply costs per patient increased from about $7 before the pandemic to as much as $20.40 during the first year of the outbreak.
Consulting group Kaufman Hall in a report last month said that hospitals were off to a difficult start this year. Operating margins were negative in February for the second consecutive month as facilities battled the omicron variant, it noted, while expenses also remained elevated compared with prior years.