Hospitals' contract labor costs soared 258% amid COVID-19

From 2019 to 2022, total contract labor expenses skyrocketed 258 percent, according to a new report based on data from more than 1,000 hospitals and health systems. 

The Hospital Vitals report from Synellis and the American Hospital Association is based on an analysis of year-end 2022 data. It lays out the financial repercussions hospitals and health systems faced amid increased reliance on contract labor to fill gaps in staffing and meet demand for patient care. 

Based on comparisons from 2019 to 2022, the report found the median contract wage rate paid to staffing firms increased nearly 57 percent. Over the three-year period, contract labor full-time equivalents surged nearly 139 percent. 

"Essentially, organizations had to use more contract labor while also paying exponentially more for the contract labor they used," the report said. 

Certain departments, such as nursing and emergency services, saw contract full-time equivalents jump more than 180 percent per unit of service, according to the report. 

In recent months, many hospitals have started to decrease contract labor utilization. Renton, Wash.-based Providence, for example, has decreased reliance on travel labor by about 40 percent, Greg Till, chief people officer of Providence, told Becker's in January. 

"We're still not back at 2019 levels, but we're aiming to get there in the next couple of months," he said. "We've also seen contract rates come down pretty significantly, in some of our ministries by almost half." 

Click here to access the Hospital Vitals full report. 

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