Labor expenses outpace increases in hours worked by employees: Kaufman Hall

Rising expenses continued to plague hospital finances in September, with hospitals' margins narrowing, according to a Nov. 1 report from healthcare consulting firm Kaufman Hall. 

Overall in September 2021, hospital expenses grew 11.2 percent when compared to 2020. Labor expenses rose 14.6 percent year over year, and supply expenses increased 15.4 percent compared to 2020.

Kaufman Hall also found that labor expenses continue to outpace the increase in the number of hours that hospital employees are working, and the number of full-time equivalent employees per adjusted, occupied bed is down 3.3 percent when compared to last year.

"Multiple factors are contributing to alarming and sustained increases in hospital expenses," said Erik Swanson, a senior vice president of data and analytics with Kaufman Hall. "Growth in labor expenses are outpacing increases in hours worked, suggesting hospitals are paying more due to nationwide labor shortages. Rising supply and drug expenses also point to worldwide supply chain issues."

While hospital revenue and volumes in September increased when compared to 2020, rising expenses led to margin declines, according to Kaufman Hall. Excluding pandemic financial aid, hospitals saw their median operating EBITDA margin declined 14.1 percent year over year. Including the aid, the median operating EBITDA margin declined 9.7 percent. 

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