Contract labor costs to decline up to 50% in 2023, CHS says

Labor costs were one of the prime reasons Community Health Systems reported a net loss of $42 million for the third quarter, but the Franklin, Tenn.-based hospital group remains optimistic about lowering some of those costs going forward.

Next year should see a 40 percent to 50 percent reduction in contract labor costs compared with 2022, President and CFO Kevin Hammons said on an investor conference call Oct. 27. That will build on a reduction from $240 million in the first half of the year to $100 million in the third quarter and a continued decline in the last three months of this year, he said.

"That should give us some meaningful lift," in terms of improved operating income, Mr. Hammons said of the continued reduction in contract labor costs.

Other areas of persistent focus on reducing costs include reducing the length of inpatient stays in the company's hospitals, particularly for non-COVID-19 cases and often with patients the hospital group is not getting reimbursed for, CEO Tim Hingtgen said. "We have been very, very vigilant in our efforts to control what we can control," he said.

Such a reduction in inpatient days also has an added advantage of freeing space for others in the community needing care, Mr. Hingtgen added.

CHS, which also reported a net loss of $369 million for the nine months ending Sept. 30, operates across 16 states with 81 acute care hospitals and more than 1,000 other clinical sites. The company reported positive net income for both the third quarter and first nine months of 2021.

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