U.S. Hospitals Struggle to Absorb Pandemic-Era Rising Costs

Fitch: COVID-19 resurgence threatens nonprofit hospitals' margins, credit  ratings | Fierce HealthcareSource: Bloomberg, by Carey Goldberg

U.S. hospitals are struggling to absorb rising costs for labor, drugs and supplies as the pandemic drags on, the American Hospital Association said Monday in a report.

Labor costs per patient jumped by 19% in 2021 from 2019, and supplies rose by over 20% per patient during that period, according to the report. Nursing expenses shifted heavily toward travel nurses. The travelers’ share of nursing budgets rose to 39% in 2022 from 5% in 2019.

The federal government has allotted more than $170 billion to help hospitals through the pandemic, but many say they are still losing money, especially after the omicron wave earlier this year. HCA Healthcare Inc. cut its annual adjusted earnings forecast on Friday amid higher labor costs, sending shares 22% lower.

 

“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 Chief Executive Officer Rick Pollack said in the statement. The association represents nearly 5,000 hospitals nationwide.

In Massachusetts, the state hospital association on Monday detailed its own financial woes, reporting that in January and February, as omicron hit, hospitals lost $430 million overall, despite federal relief money.

In January, 42 of 47 hospitals surveyed lost money and February was almost as bad, the Massachusetts Health and Hospital Association reported.  Governor Charlie Baker is proposing an additional injection of $250 million in federal money for distressed hospitals.

Last Updated 05/25/2022

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