Fitch Ratings: Increasing labor expenses dampens 2022 outlook for nonprofit hospitals

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Fitch Ratings expects the 2022 outlook for nonprofit hospitals to reflect the continuing struggle of cost pressure from labor and supplies, according to a Dec. 7 report.

Fitch expects the cost pressures to continue for several years in the best-case scenario, and in the worst-case scenario, the cost increases could become permanent, which would cause a worse outlook for hospitals.

"Expenses are already difficult to predict and very challenging to manage amid the current wage-war taking place with staffing and supplies," said Kevin Holloran, senior director of the nonprofit healthcare group in the public finance department at Fitch Ratings. "As a result, some hospitals may be reluctant to accept more risk and move towards capitation until the expense instability currently being seen is resolved or at least limited in its volatility."

Vaccine hesitancy could also cause more COVID-19 surges, especially with the new omicron variant, the report said.

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