Massachusetts hospitals seek financial flexibility on travel nurse costs

The Massachusetts Hospital Association is urging the state to grant hospitals more financial flexibility when it comes to costs for travel nurses after the state's hospitals spent $1.5 billion on temporary labor last year, according to a March 20 report from The Boston Globe. 

The association has been making the requests for more financial wiggle room to the Massachusetts Health Policy Commission, an independent agency charged with developing policies to reduce healthcare spending growth. Last week, the Massachusetts Hospital Association asked the commission to reconsider its "healthcare cost growth benchmark" for 2024, an annual target to control healthcare spending.

To make its case, the association cited data showing Massachusetts hospitals spent 610 percent more on temporary labor in 2022 than in the fiscal year that ended Sept. 30, 2019, according to the Globe

The surge in temporary labor costs is "just alarming and completely unsustainable for the healthcare system," Steve Walsh, president and chief executive of the hospital association, told the Globe, noting that it remains to be seen how those costs could change this year. 

At the start of the year, the Health Policy Commission proposed a 3.6 percent target benchmark for spending growth in 2024. A final decision is set to be made April 12. 

However, beyond a specific percentage, hospitals are asking for an overhaul of the benchmark process. Mr. Walsh said the current benchmark does not account for fluctuations, which is what hospitals have been seeing with labor costs. Instead, it sets targets based on data from previous years.

"This benchmark relies on predictability," he told the Globe, "and the input cost to hospitals surrounding labor seems to be anything but predictable." 

A spokesperson for the commission told the news outlet the group will consider all of the testimony it received during a recent hearing. 

Nationwide, hospitals and health systems have faced financial repercussions amid increased reliance on contract labor to fill gaps in staffing and meet demand for patient care. A recent report from Syntellis and the American Hospital Associations found contract labor expenses skyrocketed 258 percent for U.S. hospitals and health systems from 2019 to 2022. 

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