News Releases

Hospitals Continue to Experience Labor, Financial Pressures

The latest report from Kaufman Hall, issued at the end of November, found that hospitals across the U.S. experienced their 10^th consecutive month of negative operating margins in October. In the Midwest, hospital margins year to date through October were 53% lower than during the same period last year. This compares to 43% lower operating margins nationally.

Labor shortages and the resulting associated costs continue to have ripple effects. Labor expenses per adjusted discharge in hospitals in the Midwest were 26% higher than last year – compared to 28% nationally – year to date through October.

Length of stay also was higher as hospitals struggled to discharge patients due to labor shortages both internally and in post-acute settings. Nationally, length of stay was 9% higher year to date through October compared to last year, while in the Midwest it was up 11%. An increase in emergency department (ED) visits in October compared to September put further strain on hospitals as many were unable to admit patients needing inpatient care due to staffing shortages.

The longer length of stay did not translate to additional revenue for hospitals. At hospitals in the Midwest, while total expenses were up 5% year to date, revenues were up just 1%. Contributing to flatter revenues were decreases in both discharges and operating minutes, which were down by 12% and 10% respectively year to date in the Midwest.

Hospitals Ask Congress for Relief

The pressures on hospitals are not expected to abate anytime soon. This week, the Centers for Disease Control and Prevention Director Rochelle Walensky, M.D., said hospitals are currently experiencing the highest flu admissions in a decade this early in the season. At the start of what has already been a challenging time for seasonal illness, and with labor shortages expected to continue in the months – and years – ahead, the hospital community is seeking help from Congress. The American Hospital Association is requesting:

• An extension of the hospital-at-home program, which has proven to deliver safe and effective care, improve patient satisfaction and reduce recovery times while maximizing inpatient bed capacity within hospitals.
• A permanent expansion of the telehealth program.
• The prevention of any further damaging reimbursement cuts, including stopping the forthcoming 4% Statutory Pay-As-You-Go (PAYGO) sequester.
• A temporary per diem payment targeted to hospitals to address the issue of hospitals not being able to discharge patients to post-acute care or behavioral facilities because of staffing shortages
• An increase in the number of Medicare-funded graduate medical education positions to address the need for additional physicians in the U.S.
• Enactment of the Safety from Violence for Healthcare Employees (SAVE) Act, which provides healthcare workers with protections similar to those currently provided to flight crews, flight attendants and airport workers.

The next two weeks will be busy in Congress as they work to continue funding the government after Dec. 16, when the current budget resolution expires. A continuing resolution will likely be passed to give leaders more time to achieve a compromise on the federal budget.