Hospital labor costs may not be spiking the way they did during the height of the staffing crisis, but recent data shows the pressure isn’t letting up.
Kaufman Hall’s “National Hospital Flash Report” based on data from 1,300 hospitals collected in September and released Nov. 12 shows labor expenses continue to rise across nearly every region and hospital size — a slow, steady climb that’s reshaping budgets, workforce strategies and operational priorities for the next year.
Nationally, labor expenses per calendar day climbed 2% from August and 5% year over year. Year-to-date costs sit 5% above 2023, signaling that workforce inflation has become a defining feature of the operating environment. The challenge for the C-suite isn’t reacting to sudden shocks but leading through a prolonged period of steady, structural cost escalation.
The regional trends offer insight into how workforce pressures are playing out on the ground. In the West, labor costs rose 1% month over month and 5% year over year, with a 6% year-to-date increase reflecting intensified competition for staff and high regulatory wage floors. Leaders in these markets continue to navigate hiring environments where even small upticks can materially affect systemwide operations.
The Midwest, meanwhile, saw the strongest short-term movement: a 3% month-over-month jump and 6% year-over-year rise. Although the region’s year-to-date increase was a more moderate 4%, the short-term acceleration suggests shifting workforce dynamics. Health system leaders are raising wages and revising pay structures while also shifting away from traditional 12-hour nursing shifts to more flexible hours. For COOs and CHROs, this spike underscores the need to monitor staffing flexibility and maintain pipelines that can absorb sudden labor shifts.
The South presents one of the more stable profiles, with labor costs rising 2% month over month and 3% year over year and year to date. Stability, however, doesn’t equate to ease; maintaining workforce consistency in a competitive market requires continued investment in retention, leadership development and frontline engagement.
In the Northeast and Mid-Atlantic, labor expenses rose 2% month over month, 4% year over year and 3% year to date. These incremental increases reflect mature, high-acuity markets where large academic centers and specialty programs create constant demand for skilled labor. For executive teams, the challenge is sustaining these complex delivery models without allowing staffing costs to outpace revenue growth.
The Great Plains region stands out in the data. While month-over-month costs were flat at 0%, labor expenses rose 7% year over year and 6% year to date, the largest annual growth of any region. This pattern suggests that wage adjustments and market realignments that were slow to materialize earlier are now hitting budgets with full force, requiring leaders to adapt quickly.
Hospital size comparisons offer another layer of insight. Small hospitals — those with 25 beds or fewer — saw labor costs rise 1% month over month and 5% year over year. For executives in these facilities, the challenge is often one of capacity: limited labor pools and fewer operational levers leave little room for absorbing ongoing increases.
Mid-sized hospitals from 26 to 299 beds saw consistent patterns, with most experiencing 2% month-over-month growth and 4% to 6% annual increases. These organizations sit at a crossroads — large enough to feel the pinch of competition but not always large enough to exert market influence.
The largest hospitals faced the most intense pressures.
Facilities with 300 to 499 beds saw labor expenses rise 4% year over year and 5% year to date. Hospitals with more than 500 beds — often major regional hubs and referral centers — experienced the steepest increases: 7% year over year and 6% year to date. For system leadership teams, these numbers reflect the realities of high-acuity care, specialized service lines and expanding patient demand for complex treatments.
Labor pressures are persistent, not episodic, for all regions and hospital sizes. The C-suite’s mandate is shifting from crisis response to long-term strategy — building sustainable workforce models, advancing productivity initiatives, strengthening retention, and leveraging technology and operational redesign to stabilize labor costs.
