The American Hospital Association released a report in April examining the costs that drove 2022 to be a financial low point for hospitals and health systems.
The AHA’s “Cost of Caring” report contains percent changes for a number of expense categories from 2019 to 2022, with data from consulting firm Syntellis Performance Solutions. It concludes with five suggestions from the association to Congress for action and greater support, including the rejection of any efforts to cut Medicare and Medicaid reimbursement.
“Rising costs for drugs, supplies, and labor coupled with sicker patients, longer hospital stays and government reimbursement rates that do not come close to covering the costs of caring for patients have created a dire situation for hospitals and health systems,” AHA President and CEO Rick Pollack said in the report. “This is not just a financial problem, it is an access problem. When healthcare providers cannot afford the tools and teams they need to care for patients, they will be forced to make hard choices and the people who will be impacted the most are patients. We can’t let that happen. Congress and others must act to preserve the care our nation needs and depends on.”
Below are some key figures from the report, which can be found in full here.
1. Overall hospital expenses increased by 17.5 percent from 2019 to 2022, according to data from consulting firm Syntellis Performance Solutions. By comparison, Medicare reimbursement increased 7.5 percent in the same timeframe.
2. Overall hospital labor expenses increased 20.8 percent from 2019 to 2022, with labor expenses per patient up 24.7 percent.
3. Temporary contract labor was a significant expense within the labor category throughout the COVID-19 pandemic. Total contract labor expenses for hospitals in 2022 were 258 percent higher than in 2019. The rate hospitals were charged for contract employees increased 56.8 percent in 2022 compared to pre-pandemic levels.
4. Drugs make up another large expense category for hospitals, which have seen a 19.7 percent increase in drug expenses per patient between 2019 and 2022. This measure exceeds 18 percent when accounting for patient case mix and acuity, suggesting the increase stems from drugmakers’ pricing strategies.
5. Purchased service expenses — for operational functions such as IT, environmental services and facilities, and food and nutrition services — increased 18 percent between 2019 and 2022.
6. Hospital supply expenses per patient increased 18.5 percent between 2019 and 2022. Emergency departments were especially hard-hit by supply costs, which grew 33 percent between 2019 and 2022.
7. Food and nutrition service expenses per patient increased 15 percent between 2019 and 2022.
8. Laboratory service expenses per patient increased 27.1 percent between 2019 and 2022. Emergency service expenses per patient grew 31.9 percent in the same timeframe.