Labor expenses increased faster than non-labor expenses, which were up just 3.3% on average last month. Hospitals reported a median 4.8% increase in total expenses from June 2023 to June 2024. However, labor expenses dropped 3% from May to June.
Health systems continue to zero in on labor costs as a way to lower overall costs. More than a quarter of healthcare CEOs surveyed by accounting and advisory firm Marcum, and Hofstra University’s Frank G. Zarb School of Business in Hempstead, N.Y., reported rising labor costs as one of their top three priorities. Nearly 37% said the availability of talent was their highest priority.
One of the big ways health systems continue to ratchet down labor costs is by phasing out contract labor. HCA Healthcare, based in Nashville, Tenn., reported cutting contract labor costs by 25.7% year over year for the second quarter, boosting net income 25% year over year.
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