/ en Fri, 25 Apr 2025 14:57:40 -0500 Tue, 11 Feb 25 16:39:39 -0600 /news/headline/2025-02-11-aha-fah-urge-5th-circuit-vacate-ftc-noncompete-rule <p>The AHA and Federation of şÚÁĎŐýÄÜÁżs yesterday filed a friend-of-the-court <a href="/amicus-brief/2025-02-10-aha-amicus-brief-5th-circuit-court-challenges-ftc-non-compete-rule" title="foc brief">brief</a> in the U.S. Court of Appeals for the 5th Circuit, urging the court to vacate nationwide the Federal Trade Commission’s noncompete rule. The rule would ban, as an unfair method of competition, contractual terms that prohibit workers from pursuing certain employment after their contract with an employer ends.     </p><p>“The Commission’s treatment of the hospital labor market underscores why the Final Rule was not supported by relevant evidence, lacked a reasonable explanation, and did not consider proffered alternatives,” the brief notes. “Both the AHA and FAH explained to the Commission that the Rule could create significant distortions in the health care labor market because the Commission lacks the statutory authority to apply the rule to nonprofit hospitals.”   </p><p>In August, a Texas federal court ruled in favor of AHA and blocked the rule from taking effect, following a friend-of-the-court <a href="/system/files/media/file/2024/07/AHA-FAH-Amicus-Brief-in-FTC-Non-Compete-Case.pdf" title="amicus brief">brief</a> AHA filed weeks earlier. In 2023, the AHA had <a href="/lettercomment/2023-02-22-aha-comments-ftc-proposed-non-compete-clause-rule" title="comment letter">urged</a> the FTC to withdraw the rule, saying, “The proposed regulation errs by seeking to create a one-size-fits-all rule for all employees across all industries, especially because Congress has not granted the FTC the authority to act in such a sweeping manner.” </p> Tue, 11 Feb 2025 16:39:39 -0600 Workforce Supply and Demand /aha-center-health-innovation-market-scan/2024-09-10-5-health-care-workforce-shortage-takeaways-2028 <div class="container"><div class="row"><div class="col-md-8"><p><img src="/sites/default/files/inline-images/5-Health-Care-Workforce-Shortage-Takeaways-for-2028.png" data-entity-uuid="5e51fed2-4d2e-4b79-9448-b5d54ec1fd6f" data-entity-type="file" alt="5 Health Care Workforce Shortage Takeaways for 2028. An empty operating room with a caution icon displayed above the table due to a shortage of health care workers." width="100%" height="100%"></p><p>Projections on potential health care workforce shortages came fast and furious during the pandemic and after the public emergency expired. So, what should the field make of all this data?</p><p>A <a href="https://www.mercer.com/en-us/insights/talent-and-transformation/attracting-and-retaining-talent/future-of-the-us-healthcare-industry/" target="_blank" title="Mercer: Future of the U.S. Healthcare Industry">new study</a> based on research conducted by the Mercer consultancy and its partner Lightcast projects changes to the U.S. health care labor market by 2028 by state and metro and micro statistical areas.</p><p>The study’s projections and analysis provide context to some of the more nuanced shortages among the clinical workforce and which states may be impacted most and least by shifting market conditions, demographics and other influences.</p><h2><span>5 Key Findings on Coming Workforce Changes</span></h2><h3><span>1</span> <span>|</span> Expect a shortage of about 100,000 critical health care workers by 2028.</h3><p>The impact of the shortages will be uneven and an added burden to a system strained by geographic and demographic disparities in access to care, the report states. Populous states like California, Texas and Pennsylvania are expected to weather the storm with the estimated labor supply exceeding demand. Acute shortages are projected, however, in states like New York and New Jersey.</p><h3><span>2</span> <span>|</span> Shortage of nurse assistants (NAs) may be severe.</h3><p>Only 13 states are expected to meet or exceed future demand and Mercer forecasts a shortage of about 73,000 NAs by 2028. Because NAs make up a large share of the overall health care workforce, these projected shortages warrant close attention.</p><h3><span>3</span> <span>|</span> Gaps may differ widely by state on registered nurse availability.</h3><p>Mercer projects a slight surplus of RNs by 2028. This is counter to many other projections by experts who forecast a shortage of nurses. Mercer does project nursing shortages for New York and other East Coast states.</p><h3><span>4</span> <span>|</span> Modest surplus of physicians expected nationally.</h3><p>While research and popular discussions have predicted physician shortages in the U.S. under different scenarios, the report’s authors expect a surplus of about 28,000 doctors. The authors based their findings on the Bureau of Labor Statistics standard occupation codes for all physician jobs. While some states may find a modest surplus of physicians by 2028, states like California (-2,580), Texas (-2,830) and New York (-2,706) could see sizable shortages and the combined impact of shortages for both NPs and physicians may result in significant disruptions to the continued delivery of preventive care.</p><h3><span>5</span> <span>|</span> Compensation variation could lead some workers to move.</h3><p>Understanding compensation variation by occupation and geography is crucial to prepare for potential shortages. If NAs can earn more for doing the same job by moving to a neighboring state, or even a metropolitan area, they may choose to relocate, the authors note.</p><p><img src="/sites/default/files/inline-images/States-with-the-Largest-Gaps-for-3-Key-Occupations-That-Deliver-Primary-Care.png" data-entity-uuid="649f6a9f-ea85-4a0d-9801-d757145b8323" data-entity-type="file" alt="States with the Largest Gaps for 3 Key Occupations That Deliver Primary Care (Market projections by 2028). OB-GYNs: 1. California (-406); 2. Texas (-287); 3. Virginia (-104); 4. South Carolina (-91); 5. Missouri (-90). Pediatricians: 1. California (-732); 2. Massachusetts (-512); 3. Texas (-395); 4. Georgia (-223); 5. Ohio (-148). Family Medicine: 1. North Carolina (-1,394); 2. California (-852); 3. Illinois (-614); 4. Georgia (-223); Michigan (-575). Source: Mercer, 2024." width="100%" height="100%"></p><h2><span>3 Talent Areas to Focus on Now</span></h2><p>Given that workforce challenges are not going away any time soon, the authors suggest focusing on these key areas to address ongoing talent needs. And remember, provider organizations aren’t only competing with other health care employers but often with other fields — particularly when filling lower-wage support positions that are vital to the overall delivery of quality patient care.</p><h3>One: <span>Assess your specific supply/demand risk by occupation and department.</span></h3><p>Project internal demand for critical occupations due to attrition, expansion of services and evaluate demand against projected supply. Determine where the greatest risks lie for not filling vacant positions promptly.</p><p>Some occupations are more critical than others and will require special attention and investment. Develop an understanding of the local labor market for these critical roles. If there is not a sufficient local labor market to fill critical shortages, discuss needed steps to address the situation.</p><h3>Two: <span>Rethink sourcing strategies and processes.</span></h3><p>To ensure a consistent pipeline of talent in your local market, consider collaborating on investment in occupational development, increasing educational capacity and reviewing compensation. These include expanding your current talent acquisition efforts, internal training and graduate pipeline. You may need to pivot recruitment beyond current boundaries to meet talent where it is. Explore ways to build talent internally through training, development and certification programs. This takes time and requires proactive decision-making and a planned investment.</p><h3>Three: <span>Ensure the well-being of existing employees.</span></h3><p>This can help improve retention and reduce burnout among staff — a common source of attrition in health care. Monitor the marketplace and fine-tune the employee value proposition with respect to pay and benefits, schedule flexibility, career growth opportunities and job satisfaction. The AHA’s webpage, <a href="/building-systemic-well-being-program-5-step-blueprint">Building a Systemic Well-Being Program: 5-Step Blueprint</a>, provides a step-by-step resource for health care leaders.</p><hr><h2><span>Learn More</span></h2><p>The AHA’s American Organization for Nursing Leadership <a href="https://www.aonl.org/resources/Nurse-Leadership-Workforce-Compendium" target="_blank" title="AONL: Nursing Leadership Workforce Compendium">Workforce Compendium</a> provides a wealth of best practices and innovations to help leaders strategize and manage the complexities of the nursing workforce. Separate chapters are devoted to talent attraction and acquisition and recruitment and retention. The AHA’s <a href="/workforce-home">Workforce webpage</a> also provides a multitude of resources to help hospitals and health systems address staffing issues.</p></div><div class="col-md-4"><p><a href="/center" title="Visit the AHA Center for Health Innovation landing page."><img src="/sites/default/files/inline-images/logo-aha-innovation-center-color-sm.jpg" data-entity-uuid="7ade6b12-de98-4d0b-965f-a7c99d9463c5" alt="AHA Center for Health Innovation logo" width="721" height="130" data-entity- type="file" class="align-center"></a></p><p><a href="/center/form/innovation-subscription"><img src="/sites/default/files/2019-04/Market_Scan_Call_Out_360x300.png" data-entity-uuid data-entity-type alt width="360" height="300"></a></p></div></div></div>.field_featured_image { position: absolute; overflow: hidden; clip: rect(0 0 0 0); height: 1px; width: 1px; margin: -1px; padding: 0; border: 0; } .featured-image{ position: absolute; overflow: hidden; clip: rect(0 0 0 0); height: 1px; width: 1px; margin: -1px; padding: 0; border: 0; } Tue, 10 Sep 2024 06:00:00 -0500 Workforce Supply and Demand /costsofcaring <div class="container"><div class="row"><div class="col-md-8"><h2><span>Introduction</span></h2><p><img src="/sites/default/files/inline-images/Figure-1-Labor-constitutes-largest-percentage-of-hospital-expenses.png" data-entity-uuid="d6c1793f-d4c3-44ea-8ba5-d1f15b6518e2" data-entity-type="file" alt="Figure 1. Labor constitutes largest percentage of hospital expenses. Labor: 60% ($839 Billion); Supplies: 13% ($181 Billion); Drugs: 8% ($115 Billion); Other: 19% ($269 Billion). Note: Average expenses estimated by Strata Decision Technology median 2023 values across all hospital spending. Labor is inclusive of purchased services and professional fees." width="718" height="752" id="figure1" class="align-right">Hospitals and health systems have been at the forefront of a major transformation while at a crossroads of increasing demand for higher acuity care and deepening financial instability. Persistent workforce shortages, severe fractures in the supply chain for drugs and supplies, and high levels of inflation have collectively fueled hospitals’ costs as they care for patients 24/7 (see <a href="#figure1">Figure 1</a>). At the same time, hospitals’ costs have been met with inadequate increases in reimbursement by government payers and increasing administrative burden due to inappropriate commercial health insurer practices.</p><p><strong>Taken together, these issues have created an environment of financial uncertainty where many hospitals and health systems are operating with little to no margin. While recent data suggest that some hospital and health system finances have experienced modest stabilization from historic lows in 2022, the hospital field is still far from where it needs to be to meet the demand for care, invest in new and promising technologies and interventions, and stand ready for the next health care crisis.</strong></p><p><img src="/sites/default/files/inline-images/Figure-2-Inflation-growth-was-more-than-double-the-growth-in-IPPS-reimbursement-2021-2023.png" data-entity-uuid="90ce5355-e63a-4187-bfae-5a641d891486" data-entity-type="file" alt="Figure 2. Inflation growth was more than double the growth in IPPS reimbursement, 2021–2023. Inflation: 12.4%; IPPS Increases: 5.2%. Note: Inflation calculated using annual average CPI-U between 2021 and 2023 from BLS. IPPS increase from FY2020–2023 market basket increases net of other adjustments." width="385" height="705" id="figure2" class="align-left">Fresh off a historically challenging year financially in 2022 in which over half of hospitals closed out the year operating at a loss, many hospitals spent much of 2023 simply struggling to break even.<a href="#fn1"><sup>1</sup></a> Economy-wide inflation grew by 12.4% between 2021 and 2023 – more than two times faster than Medicare reimbursement for hospital inpatient care (see <a href="#figure2">Figure 2</a>).</p><p>Since the start of 2022, the number of days cash on hand for hospitals and health systems has declined by 28.3%, according to data from Strata Decision Technology, which provides data and cloud-based financial planning, decision support and performance analytics solutions.<a href="#fn2"><sup>2</sup></a></p><p>Diverting dollars from their reserves to maintain access to care has required tradeoffs that have limited many hospitals and health systems from investing in updated infrastructure, new medical technology and equipment, and other clinical needs — particularly among those hospitals in severe financial distress.<a href="#fn3"><sup>3</sup></a><sup>,</sup><a href="#fn4"><sup>4</sup></a> For example, the average age of capital investments for medical equipment and infrastructure, after years of remaining relatively flat, increased by 7.1% for all hospitals in 2023, according to data from Strata Decision Technology. While the constraints and burdens of increasing plant age present serious challenges to hospitals and health systems in their own right, the inability to make needed capital investments has contributed to bond rating agencies issuing rating downgrades, making it harder for some hospitals and health systems to borrow money.<a href="#fn5"><sup>5</sup></a> Ongoing reimbursement challenges, made worse by crises like the recent Change Healthcare cyberattack, and increased operating costs create an unsustainable financial environment.<a href="#fn6"><sup>6</sup></a> While these challenges alone could cripple any organization, hospitals and health systems continue to face additional threats from ongoing Medicaid redeterminations increasing uncompensated care<a href="#fn7"><sup>7</sup></a>, regulatory changes that add operational burden, cyberattacks that threaten the health care infrastructure and potential legislation that would further cut Medicare payments to hospitals.</p><p>This report provides a snapshot of the current cost realities facing hospitals and health systems and how they impact their ability to care for patients and communities.</p><h2><span>1. Costs of Providing Essential Services</span></h2><p><img src="/sites/default/files/inline-images/Figure-3-Cumulative-Medicaid-and-Medicare-underpayments.png" data-entity-uuid="1846fd31-a865-4fcb-8de7-b4ca6bf1b3f2" data-entity-type="file" alt="Figure 3. Cumulative Medicaid and Medicare underpayments. 2013 to 2017: -$375 Billion; 2018 to 2022: -$522 Billion. Note: AHA Annual Survey 2013 to 2022 all dollars inflation adjusted to 2022 values using CPI-U from the BLS." width="620" height="672" id="figure3" class="align-right">Hospitals often play the critical — and sometimes only — role in providing access to essential health care services, such as emergency care and behavioral health, which are necessary for the health and well-being of the communities they serve. Further, oftentimes these are services that are not offered by other types of health care providers. In 2022, the most recent year for which data are available, hospitals admitted nearly 137 million patients in emergency departments and delivered over 3.5 million babies.<a href="#fn8"><sup>8</sup></a> Many of these essential services are extremely resource intensive and costly to offer. Further compounding this issue are demographic trends such as an aging population and clinical factors such as higher patient acuity. This has driven a steady rise in the share of inpatient utilization among more clinically complex patients covered by Medicare and Medicaid.<a href="#fn9"><sup>9</sup></a> Not only are inpatient services costlier to provide, but public payer payments for these services fall well below costs. In fact, underpayments from Medicare and Medicaid totaled nearly $130 billion in 2022, and Medicare paid just 82 cents for every dollar hospitals spent caring for patients — resulting in a shortfall of almost $100 billion.<a href="#fn10"><sup>10</sup></a> Troublingly, cumulative underpayments in the second half of the last decade totaled more than half a trillion dollars — a nearly 40% increase compared to the first half even after adjusting for inflation (see <a href="#figure3">Figure 3</a>).</p><p>However, the reimbursement challenges do not end with Medicare and Medicaid Reimbursement for some services consistently fall below costs across all payer types. For example, payments for inpatient behavioral health services were 34.3% below costs across all payers on average in 2023, according to data from Strata Decision Technology (see <a href="#figure4">Figure 4</a>). This is especially concerning given the increased utilization of behavioral health services over the last few years.</p><img src="/sites/default/files/inline-images/Figure-4-Hospital-payments-do-not-cover-the-costs-of-providing-vital-patient-services-20240612.png" data-entity-uuid="96ed5e28-677a-4ba0-8659-407033fe0a56" data-entity-type="file" alt="Figure 4. Hospital payments do not cover the costs of providing vital inpatient services. Average margin on services: Behavioral Health -34.3%; Nephrology -34.1%; Burns and Wounds -24.1%; Pulmonology -19.4%; Infectious Disease -15.3%. Note: AHA analysis of 2023 average service line payment and cost across all payers from Strata Decision Technology. Does not include supplemental payments from Medicaid." width="1565" height="623" id="figure4"><p>In the outpatient setting, average payments for costly burn and wound services were 42.9% below costs across all payers (see <a href="#figure5">Figure 5</a>). These shortfalls have been especially acute for government payers like Medicare. For example, average Medicare margins for behavioral health services were -38.9% in 2023.</p><img src="/sites/default/files/inline-images/Figure-5-Hospital-payments-also-fail-to-cover-the-costs-of-providing-essential-outpatient-services.png" data-entity-uuid="a43ea45f-a309-46a9-9acc-fb54b385b5b2" data-entity-type="file" alt="Figure 5. Hospital payments also fail to cover the costs of providing essential outpatient services. Average margin on services: Burns and wounds -42.9%; Nephrology -32.3%; Behavioral Health -31.7%; Pulmonology -17.5%; Infectious Disease -12.1%. Note: AHA analysis of 2023 average service line payment and cost across all payers from Strata Decision Technology. Does not include supplemental payments from Medicaid." width="1558" height="616" id="figure5"><p>Taken together, these data highlight the challenges that hospitals and health systems face in providing essential services that communities need. This is particularly true for hospitals in rural areas, where the financial challenges can be even more severe.</p><h2><span>2. Hospital Administrative Expenses</span></h2><p><span><em><strong><img src="/sites/default/files/inline-images/Figure-6-Premiums-grew-twice-as-fast-as-hospital-prices-in-2023.png" data-entity-uuid="d158d191-431b-4548-aebc-57269df046dc" data-entity-type="file" alt="Figure 6. Premiums grew twice as fast as hospital prices in 2023. Health Insurance Premiums: 6.7%; Hospital Prices: 2.6%. Note: Health insurance premiums represent premiums for a family of four, from KFF Employer Health Benefits Survey, 2023. Hospital Prices: BLS, annual average Producer Price index for hospitals." width="607" height="790" id="figure6" class="align-right">Some commercial health insurer practices increase hospital costs and delay care to patients</strong></em></span></p><p>Hospitals have seen significant growth in administrative costs due to inappropriate practices by certain commercial health insurers, including Medicare Advantage (MA) and Medicaid managed care plans. In addition to increasing premiums, which grew twice as fast as hospital prices in 2023, commercial health insurers have overburdened hospitals with time-consuming and labor-intensive practices like automatic claims denials and onerous prior authorization requirements (see <a href="#figure6">Figure 6</a>).<a href="#fn11"><sup>11</sup></a></p><p>A 2021 study by McKinsey estimated that hospitals spent $10 billion annually on dealing with insurer prior authorizations.<a href="#fn12"><sup>12</sup></a> Additionally, a 2023 study by Premier found that hospitals are spending just under $20 billion annually in appealing denials — more than half which was wasted on claims that should have been paid out at the time of submission.<a href="#fn13"><sup>13</sup></a> Denials issued by commercial MA plans rose sharply by 55.7% in 2023.<a href="#fn14"><sup>14</sup></a> Notably, many of these denials were ultimately overturned, consistent with a study by the Department of Health and Human Services’ (HHS) Office of Inspector General (OIG) that found 75% of care denials were subsequently overturned.<a href="#fn15"><sup>15</sup></a> These denials are particularly concerning because they often occur for medically necessary care, which can result in direct patient harm. In fact, a recent HHS OIG report found that nearly one in five MA denials met Medicare coverage rules, which meant that had they been paid via Medicare fee-for-service, they would have been paid without denial.<a href="#fn16"><sup>16</sup></a> Even when denials are ultimately overturned, hospitals are not paid for the costs incurred to navigate that burdensome and resource-intensive process. Making matters worse, MA plans paid hospitals less than 90% of Medicare rates despite costing taxpayers more than traditional Medicare in 2023.<a href="#fn17"><sup>17</sup></a><sup>,</sup><a href="#fn18"><sup>18</sup></a> Although partly a function of lower rates, the worsening administrative overload is simply costing hospitals more and more.</p><p>Though these issues are often felt most acutely with MA and Medicaid managed care plans, it also is true for other commercial payers, where claims denials increased by 20.2% in 2023. Moreover, the time taken by commercial payers to process and pay hospital claims from the date of submission increased by 19.7% in 2023, according to data from the Vitality Index. For hospitals and health systems, these practices result in billions of dollars in lost revenue each year, which require hospitals to divert dollars away from patient care to instead focus on seeking payment from commercial insurers.<a href="#fn19"><sup>19</sup></a> Without further intervention, these trends are expected to continue and worsen. National expenditures on the administrative costs of private health insurance spending alone are projected to account for 7% of total health care spending between 2022 and 2031 and are projected to grow faster than expenditures for hospital care.<a href="#fn20"><sup>20</sup></a></p><h3><span>Other expenses</span></h3><p>Hospitals also are spending more on things that are not direct patient care services but are still critical to delivering care and maintaining operations. For example, the costs associated with implementing, maintaining and upgrading information management systems and overall technology infrastructure, while critical to improving efficiency and quality of care, typically represent significant investments.</p><p>Additionally, given the confidential nature of patient data in these systems, hospitals have increasingly become targets for cyberattacks. As a result, the costs of defending against these attacks and protecting patient data has grown steadily.<a href="#fn21"><sup>21</sup></a> Health care data breaches are by far the costliest of any other sector.<a href="#fn22"><sup>22</sup></a> As cyberattacks and data breaches in health care have grown and regulators are requiring more robust protections, hospitals and health systems are finding themselves increasingly trying to invest in cybersecurity.<a href="#fn23"><sup>23</sup></a> Protecting against cyberattacks and other vulnerabilities is important to patient care, but is increasingly costly. In 2022, hospitals spent nearly $30 billion on property and medical liability insurance, according to data from Lightcast.</p><h2><span>3. Hospital Drug Expenses</span></h2><p>An area of persistent cost pressure for hospitals and health systems has been the rapid and sustained growth in drug expenses. Hospitals spent $115 billion on drug expenses in 2023 alone. One of the factors fueling this growth is drug company decisions to impose large price increases on existing drugs. However, 2023 also saw a continuation of a long-standing trend of drug companies introducing new drugs at record prices. In 2023, the median annual list price for a new drug was $300,000, an increase of 35% from the prior year (see <a href="#figure7">Figure 7</a>).<a href="#fn24"><sup>24</sup></a> A recent report by the HHS Assistant Secretary for Planning and Evaluation (ASPE) found that between 2022 and 2023, prices for nearly 2,000 drugs increased faster than the rate of general inflation, with an average price hike of 15.2%.<a href="#fn25"><sup>25</sup></a></p><img src="/sites/default/files/inline-images/Figure-7-Annual-List-Prices-of-Novel-Drugs-Launched-in-2023.png" data-entity-uuid="b88a70d2-300e-48d9-90f9-e3fbe3b80e83" data-entity-type="file" alt="Figure 7. Annual List Prices of Novel Drugs Launched in 2023*. Elevidys: $3,200,000; Roctavian: $2,900,000; Veopoz: $1,799,980; Altuviiio: $970,000; Pombiliti: $650,000; Talvey: $360,000; Orserdu: $280,526; Adzynma: $245,000; Zynyz: $170,880; Filspari: $129,965; Velsipity: $74,000; Leqembi: $26,000. Median price of new drug: $300,000. Median household: $74,580. Average price of a new car: $48,759. Source: Annual list prices of novel drugs launched in 2023 are from a Reuters survey of new drug costs. Median household income is from 2022 Census Bureau data. Average price of new care is from Kelly Blue Book new-vehicle transaction price in December 2023." width="1563" height="771" id="figure7"><p><img src="/sites/default/files/inline-images/Figure-8-Increase-in-drug-shortages-and-drug-prices-2022-2023.png" data-entity-uuid="e6973989-b4db-4b1f-a2ac-dd8b512598d6" data-entity-type="file" alt="Figure 8. Increase in drug shortages and drug prices, 2022–2023. 2022: Drug Shortages 8.0%; Drug Prices 11.5%. 2023: Drug Shortages: 13.0%; Drug Prices 15.2%. Note: Drug shortage data from Utah Drug Information System; Drug price data from ASPE." width="607" height="691" id="figure8" class="align-right">While high drug prices alone pose significant challenges for hospitals and health systems, it is compounded by the fact that many of these same drugs are in shortage. In fact, 2023 saw the most drug shortages in over a decade; there were an average of 301 drugs in shortage per quarter, an increase of 13.0% from the previous year (see <a href="#figure8">Figure 8</a>). These shortages added as much as 20% to hospital drug budgets, according to data from the American Society of Health System Pharmacists (ASHP). These shortages can occur for many reasons, including fractured global supply chains lack of available raw materials, and decisions by drug companies that lack incentives to produce low-margin generic medications.<a href="#fn26"><sup>26</sup></a> An ASHP survey found that more than 99% of hospital and health system pharmacists experienced drug shortages in 2023, with 85% of respondents describing the severity of drug shortages as critically or moderately impactful.<a href="#fn27"><sup>27</sup></a> While generic drugs comprised the majority of medications in shortage, estimated to make up as much as 83% of shortages, many of these drugs also were used to treat cancer and autoimmune diseases.<a href="#fn28"><sup>28</sup></a></p><p>Hospital pharmacy staff have limited options for navigating drug shortages. They can purchase the drug by going outside their traditional suppliers and group purchasing agreements, access alternate concentrations or package sizes of the drugs than what is needed or purchase a substitute drug with the same clinical indication. However, all three of these options mean hospitals pay higher prices to acquire the drugs. An ASPE report found up to a 16.6% increase in the prices of drugs in shortage; in many cases, the increase in the price of substitute drugs were at least three times higher than the price increase of the drug in shortage.<a href="#fn29"><sup>29</sup></a> The costs incurred as a result of drug shortages are compounded by staff overtime needed to find, procure and administer alternative drugs, to manage the added challenges of multiple medication dispensing automation systems and changing electronic health records (EHRs), and to undergo training to ensure medication safety using alternative therapies.<a href="#fn30"><sup>30</sup></a></p><h2><span>4. Hospital Supply Costs</span></h2><div class="row"><div class="col-md-5"><p>Having adequate and up-to-date medical supplies, devices and equipment are necessary for hospitals to deliver high quality care to patients. These can include artificial joints used to treat patients with conditions such as arthritis, robotic surgery machines used to perform laparoscopic surgical procedures, and complex imaging machinery used for clinical diagnostics. Most of these items are expensive to acquire and maintain and rely on increasingly volatile global supply chains. Comprising approximately 10.5% of the average hospital’s budget, medical supply expenses collectively accounted for $146.9 billion in 2023, an increase of $6.6 billion over 2022, according to data from Strata Decision Technology. As technology and science are constantly evolving, hospitals routinely need to purchase new supplies, devices and equipment that meet clinical care standards and ensure high quality care.</p><p>The upfront costs for critical equipment and device upgrades come at a significant cost (<a href="#table1">Table 1</a>). For example, the advanced technology of cardiac magnetic resonance imaging (cMRI) machines, which have allowed doctors to develop a deeper understanding of cardiac pathologies and has led to improved diagnostics, costs hospitals on average $3.2 million. For some hospitals that have high demand for cardiac services, they may need to purchase multiple cMRI machines. The additional costs for ongoing maintenance, upgrades and staff training also add to the total costs hospitals must incur to deliver their patients with the high quality care.</p></div><div class="col-md-7"> table, th, td { border: 1px solid; } th { background-color: #69b3e733; } } <table id="table1"><tbody><tr><td><h3>Table 1. Medical Device and Equipment Market Prices</h3></td></tr><tr><td><em>Cutting-edge innovation and technologies provide hospitals with the means to enhance patient outcome in their continuous commitment to delivering top-tier patient care. The featured equipment is intricately connected to advancements in diagnostics, heightened success rates in cardiovascular surgery, and more effective joint replacement procedures.</em></td></tr></tbody></table><table><thead><tr><th>Medical Devices and Equipment</th><th>Average List Price</th></tr></thead><tbody><tr><td colspan="2"><strong>Point of Care ultrasound devices</strong></td></tr><tr><td>Pocket-sized handheld or tablet-based</td><td>$8,143</td></tr><tr><td>Compact ultrasound systems*</td><td>$73,797</td></tr><tr><td colspan="2"><strong>Cardiovascular diagnostic and surgical equipment</strong></td></tr><tr><td>Cardiac magnetic resonance imaging (cMRI) machine</td><td>$3,230,728</td></tr><tr><td>Cardiopulmonary bypass system</td><td>$325,442</td></tr><tr><td colspan="2"><strong>Joint implant proprietary software and equipment</strong></td></tr><tr><td>Image based planning software</td><td>$222,132</td></tr><tr><td>Navigation software system (guide surgeons in real-time)</td><td>$135,365</td></tr><tr><td colspan="2"><p>*Larger than handheld devices, but still portable. May have more advanced features.</p><p><span><strong>Note:</strong></span> Market prices of medical devices and equipment are courtesy of ECRI, an independent not-for-profit corporation that provides a wide range of services dealing with health care technology.</p></td></tr></tbody></table></div></div><h2><span>5. Hospital Labor Costs</span></h2><p>Hospitals’ labor costs increased by more than $42.5 billion between 2021 and 2023 to a total of $839 billion, accounting for nearly 60% of the average hospital’s expenses. Hospitals continue to turn to expensive contract labor to fill gaps and maintain access to care, spending approximately $51.1 billion on contracted staff in 2023.</p><p><img src="/sites/default/files/inline-images/Figure-9-Growth-in-Total-Hospital-Employee-Compensation-Far-Outpaces-Inflation.png" data-entity-uuid="5fa4709d-12e9-47f3-af06-07ac3b0937b6" data-entity-type="file" alt="Figure 9. Growth in Total Hospital Employee Compensation Far Outpaces Inflation. 2014 to 2023: Inflation 28.7%; Hospital Employee Compensation 45.0%. Note: BLS Annual average Employee Cost Index, 2014 to 2023 for hospitals and CPI-U, 2014 to 2023." width="522" height="592" id="figure9" class="align-right">Though expenditures on contract labor have moderated since pandemic highs, the spending remains elevated and has added to the financial challenges hospitals and health systems face. This is especially true for smaller, rural hospitals where the local workforce pool is smaller and it can be more difficult to recruit staff. Hospitals’ labor costs also can be very sensitive to sudden fluctuations in the demand and supply of labor. Growth in wages and benefits of hospital employees has vastly surpassed economy-wide inflation over the last decade (see <a href="#figure9">Figure 9</a>).</p><p>Yet, critical labor shortages persist, especially in the face of growing burnout among clinicians. Employee burnout hastened by the pandemic and further exacerbated by commercial insurer administrative burden and increase in violence against hospital employees, led to an unprecedented exodus of health care professionals in recent years.<a href="#fn31"><sup>31</sup></a> Resignations per month among health care workers grew 50% between 2020 and 2023, according to data from McKinsey.<a href="#fn32"><sup>32</sup></a> Additionally, hospitals have been forced to contend with record high turnover rates — fueling additional expenses for hospitals looking to recruit new workers.<a href="#fn33"><sup>33</sup></a></p><p>Consequently, hospitals and health systems have invested more to attract and retain talent. Data from Lightcast indicates that advertised wage rates across all hospital jobs jumped by 10.1% during 2023. With a growing gap between supply and demand for health care workers over the next decade, labor costs will likely continue to be an issue for hospitals.</p><h2><span>A Look Ahead to the Rest of 2024</span></h2><p>Though 2024 is the first full year out of the most recent public health emergency period, hospitals and health systems continue to face many challenges. Credit ratings agencies have painted a bleak picture for the hospital sector in 2024.<a href="#fn34"><sup>34</sup></a> According to the S&P, negative outlooks for not-for-profit hospitals are proportionally at their highest in over a decade, affecting 24% of the sector.<a href="#fn35"><sup>35</sup></a> Similarly, Fitch reported a credit downgrade-to-upgrade ratio of 3:1 — alarmingly close to the ratio seen during the 2008 financial crisis — calling it a “make or break” year and highlighting the sector’s struggles, particularly among smaller hospitals with annual revenues under $500 million.<a href="#fn36"><sup>36</sup></a> While it is expected that hospitals and health systems will continue to face cost increases for labor, drugs, and medical supplies, there are additional headwinds to consider which include:</p><ul><li>Coverage losses due to Medicaid redeterminations: More than 19 million Medicaid enrollees have been disenrolled through 2023.<a href="#fn37"><sup>37</sup></a> Though partially offset by record Marketplace enrollment and possible enrollment in employer-sponsored coverage, this has still resulted in a steady increase in uncompensated care costs throughout 2023 and will likely continue into 2024 – particularly for states that have not expanded Medicaid.<a href="#fn38"><sup>38</sup></a></li><li>Potential legislative actions to cut hospital Medicare payments for patient care: Congress is considering several bills that would impose additional payment reductions to services provided in hospital outpatient departments. These proposals, referred to as “siteneutral” payment cuts, would exacerbate financial challenges for hospitals and threaten patients’ access to quality care.</li><li>Cybersecurity risks impact providers and patient care: The cyberattack on Change Healthcare in February 2024 has underscored the extensive repercussions such incidents can have on patient care and hospital operations. The disruptions stemming from that cyberattack have significantly hindered revenue cycle management, pharmacy services, select health care technologies, clinical authorizations, and more across multiple health systems, serving as an example of how an attack can reverberate across the entire health care sector when a business that provides numerous mission-critical services is compromised.<a href="#fn39"><sup>39</sup></a></li><li>Ongoing and escalating hospital violence: There has been a significant uptick in violence against health care workers in recent years.<a href="#fn40"><sup>40</sup></a> To address this issue, hospitals are making significant investments in violence prevention and preparedness efforts to support their employees.</li></ul><h2><span>Conclusion</span></h2><p>America’s hospitals and health systems are dedicated to providing high-quality 24/7 care to all patients in every community across the country. While the commitment to caring and advancing health never wavers, hospitals continue to face significant challenges making it difficult to ensure the care is always there.</p><p>The AHA continues to urge Congress and the Administration to support policies to make sure hospitals and health systems have the resources they need to continue providing 24/7 care to all patients and communities. These include:</p><ul><li>Rejecting Medicare and Medicaid cuts to hospital care, including harmful site-neutral proposals and forthcoming reductions to Medicaid Disproportionate Share hospitals.</li><li>Supporting and strengthening the health care workforce.</li><li>Protecting the 340B Drug Pricing Program from any harmful changes and reining in the increasing costs of drugs.</li><li>Taking actions to hold commercial insurers accountable for practices that delay, deny and disrupt care.</li><li>Bolstering support to enhance cybersecurity of hospitals and the entire health care system.</li></ul><hr><h2>End Notes</h2><ol><li id="fn1"><a href="www.kaufmanhall.com/news/2022-worst-financial-year-hospitals-and-health-systems-start-pandemic" target="_blank">www.kaufmanhall.com/news/2022-worst-financial-year-hospitals-and-health-systems-start-pandemic</a></li><li id="fn2"><a href="https://www.syntellis.com/sites/default/files/2023-11/aha_q2_2023_v2.pdf" target="_blank">www.syntellis.com/sites/default/files/2023-11/aha_q2_2023_v2.pdf</a></li><li id="fn3"><a href="https://fortune.com/well/2024/01/11/rural-hospitals-are-caught-in-an-aging-infrastructure-conundrum/" target="_blank">fortune.com/well/2024/01/11/rural-hospitals-are-caught-in-an-aging-infrastructure-conundrum/</a></li><li id="fn4"><a href="/guidesreports/2023-04-19-essential-role-financial-reserves-not-profit-healthcare" target="_blank">www.aha.org/guidesreports/2023-04-19-essential-role-financial-reserves-not-profit-healthcare</a></li><li id="fn5"><a href="https://www.modernhealthcare.com/finance/hospital-2023-credit-rating-downgrade-fitch-ratings-sp-global-moodys" target="_blank">www.modernhealthcare.com/finance/hospital-2023-credit-rating-downgrade-fitch-ratings-sp-global-moodys</a></li><li id="fn6"><a href="/cybersecurity/change-healthcare-cyberattack-updates" target="_blank">www.aha.org/cybersecurity/change-healthcare-cyberattack-updates</a></li><li id="fn7"><a href="/news/blog/2023-09-20-unwise-dsh-cuts-combined-rise-uncompensated-care-due-medicaid-redeterminations-coverage-losses-further" target="_blank">www.aha.org/news/blog/2023-09-20-unwise-dsh-cuts-combined-rise-uncompensated-care-due-medicaid-redeterminations-coverage-losses-further</a></li><li id="fn8">AHA analysis of 2022 Annual Survey data.</li><li id="fn9"><a href="https://www.trillianthealth.com/insights/the-compass/the-total-available-market-of-commercially-insured-patients-is-shrinking" target="_blank">www.trillianthealth.com/insights/the-compass/the-total-available-market-of-commercially-insured-patients-is-shrinking</a></li><li id="fn10"><a href="/news/headline/2024-01-10-aha-infographic-medicare-underpayments-hospitals-nearly-100-billion-2022#:~:text=AHA%20infographic%3A%20Medicare%20underpayments%20to%20hospitals%20nearly%20%24100%20billion%20in%202022,-Jan%2010%2C%202024&text=Medicare%20paid%20hospitals%20a%20record,negative%20Medicare%20margins%20that%20year." target="_blank">www.aha.org/news/headline/2024-01-10-aha-infographic-medicare-underpayments-hospitals-nearly-100-billion-2022#:~:text=AHA%20infographic% 3A%20Medicare%20underpayments%20to%20hospitals%20nearly%20%24100%20billion%20in%202022,-Jan%2010%2C%202024&text=Medicare%20 paid%20hospitals%20a%20record,negative%20Medicare%20margins%20that%20year.</a></li><li id="fn11"><a href="https://www.wsj.com/health/healthcare/health-insurance-cost-increase-5b35ead7" target="_blank">www.wsj.com/health/healthcare/health-insurance-cost-increase-5b35ead7</a></li><li id="fn12"><a href="https://www.mckinsey.com/~/media/mckinsey/industries/healthcare%20systems%20and%20services/our%20insights/administrative%20simplification%20how%20to%20save%20a%20quarter%20trillion%20dollars%20in%20us%20healthcare/administrative-simplification-how-to-save-a-quarter-trillion-dollars-in-us-healthcare.pdf?shouldIndex=false" target="_blank">www.mckinsey.com/~/media/mckinsey/industries/healthcare%20systems%20and%20services/our%20insights/administrative%20simplification%20 how%20to%20save%20a%20quarter%20trillion%20dollars%20in%20us%20healthcare/administrative-simplification-how-to-save-a-quarter-trillion-dollars- in-us-healthcare.pdf?shouldIndex=false</a></li><li id="fn13"><a href="https://premierinc.com/newsroom/blog/trend-alert-private-payers-retain-profits-by-refusing-or-delaying-legitimate-medical-claims" target="_blank">premierinc.com/newsroom/blog/trend-alert-private-payers-retain-profits-by-refusing-or-delaying-legitimate-medical-claims</a></li><li id="fn14"><a href="https://www.syntellis.com/sites/default/files/2023-11/aha_q2_2023_v2.pdf">www.syntellis.com/sites/default/files/2023-11/aha_q2_2023_v2.pdf</a></li><li id="fn15"><a href="https://oig.hhs.gov/oei/reports/OEI-09-19-00350.pdf" target="_blank">oig.hhs.gov/oei/reports/OEI-09-19-00350.pdf</a></li><li id="fn16"><a href="https://oig.hhs.gov/oei/reports/OEI-09-18-00260.pdf" target="_blank">oig.hhs.gov/oei/reports/OEI-09-18-00260.pdf</a></li><li id="fn17"><a href="https://www.ensemblehp.com/blog/the-real-cost-of-medicare-advantage-plan-success/" target="_blank">www.ensemblehp.com/blog/the-real-cost-of-medicare-advantage-plan-success/</a></li><li id="fn18"><a href="https://www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/reports/mar21_medpac_report_to_the_congress_sec.pdf#page=401" target="_blank">www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/reports/mar21_medpac_report_to_the_congress_sec.pdf#page=401</a></li><li id="fn19"><a href="https://www.ama-assn.org/practice-management/prior-authorization/health-systems-plagued-payer-takeback-schemes-110000#:~:- text=authorization’s financial impact-,Prior authorization’s financial impact,an increase of 67%.”" target="_blank">www.ama-assn.org/practice-management/prior-authorization/health-systems-plagued-payer-takeback-schemes-110000#:~:- text=authorization’s%20 financial%20impact-,Prior%20authorization’s%20financial%20impact,an%20increase%20of%2067%25.%E2%80%9D</a></li><li id="fn20">AHA analysis of NHE projections of 2022-2031 expenditures.</li><li id="fn21"><a href="https://www.healthcaredive.com/news/healthcare-ransomware-costs-comparitech-77-billion/698044/" target="_blank">www.healthcaredive.com/news/healthcare-ransomware-costs-comparitech-77-billion/698044/</a></li><li id="fn22"><a href="https://intraprisehealth.com/the-cost-of-cyberattacks-in-healthcare/" target="_blank">intraprisehealth.com/the-cost-of-cyberattacks-in-healthcare/</a></li><li id="fn23"><a href="https://www.healthcareitnews.com/news/cisos-face-budgetary-pressures-burnout-during-global-recession" target="_blank">www.healthcareitnews.com/news/cisos-face-budgetary-pressures-burnout-during-global-recession</a></li><li id="fn24"><a href="https://www.reuters.com/business/healthcare-pharmaceuticals/prices-new-us-drugs-rose-35-2023-more-than-previous-year-2024-02- 23/?utm_source=facebook&utm_medium=news_tab" target="_blank">www.reuters.com/business/healthcare-pharmaceuticals/prices-new-us-drugs-rose-35-2023-more-than-previous-year-2024-02- 23/?utm_source=facebook& utm_medium=news_tab</a></li><li id="fn25"><a href="https://aspe.hhs.gov/reports/changes-list-prices-prescription-drugs" target="_blank">aspe.hhs.gov/reports/changes-list-prices-prescription-drugs</a></li><li id="fn26"><a href="https://www.fda.gov/media/131130/download?attachment" target="_blank">www.fda.gov/media/131130/download?attachment</a></li><li id="fn27"><a href="https://news.ashp.org/-/media/assets/drug-shortages/docs/ASHP-2023-Drug-Shortages-Survey-Report.pdf" target="_blank">news.ashp.org/-/media/assets/drug-shortages/docs/ASHP-2023-Drug-Shortages-Survey-Report.pdf</a></li><li id="fn28"><a href="https://www.iqvia.com/insights/the-iqvia-institute/reports-and-publications/reports/drug-shortages-in-the-us-2023?utm_campaign=2023_ Drug_Shortages_Report_INSTITUTE_IS&utm_medium=email&utm_source=Eloqua" target="_blank">www.iqvia.com/insights/the-iqvia-institute/reports-and-publications/reports/drug-shortages-in-the-us-2023?utm_campaign=2023_ Drug_Shortages_Report_ INSTITUTE_IS&utm_medium=email&utm_source=Eloqua</a></li><li id="fn29"><a href="https://aspe.hhs.gov/reports/drug-shortages-impacts-consumer-costs" target="_blank">aspe.hhs.gov/reports/drug-shortages-impacts-consumer-costs</a></li><li id="fn30"><a href="https://link.springer.com/article/10.1007/s13181-023-00950-6#:~:text=Shortages%20compromise%20or%20delay%20medical,morbidity%20%5B1%2C%202%5D." target="_blank">link.springer.com/article/10.1007/s13181-023-00950-6#:~:text=Shortages%20compromise%20or%20delay%20medical,morbidity%20%5B1%2C%202%5D.</a></li><li id="fn31"><a href="/system/files/media/file/2023/06/fact-sheet-examining-the-real-factors-driving-physician-practice-acquisition.pdf" target="_blank">www.aha.org/system/files/media/file/2023/06/fact-sheet-examining-the-real-factors-driving-physician-practice-acquisition.pdf</a></li><li id="fn32"><a href="https://www.mckinsey.com/industries/healthcare/our-insights/how-health-systems-and-educators-can-work-to-close-the-talent-gap" target="_blank">www.mckinsey.com/industries/healthcare/our-insights/how-health-systems-and-educators-can-work-to-close-the-talent-gap</a></li><li id="fn33"><a href="https://www.healthcarefinancenews.com/news/rn-turnover-healthcare-rise" target="_blank">www.healthcarefinancenews.com/news/rn-turnover-healthcare-rise</a></li><li id="fn34"><a href="https://on24static.akamaized.net/event/44/67/84/2/rt/1/documents/resourceList1709062595167/ushealthcaresectorcreditbeat227241709062595167.pdf" target="_blank">on24static.akamaized.net/event/44/67/84/2/rt/1/documents/resourceList1709062595167/ushealthcaresectorcreditbeat227241709062595167.pdf</a></li><li id="fn35"><a href="https://www.spglobal.com/ratings/en/research/articles/231206-historical-peak-of-negative-outlooks-signals-challenges-remain-for-u-s-not- for-profit-acute-health-care-provi-12927513" target="_blank">www.spglobal.com/ratings/en/research/articles/231206-historical-peak-of-negative-outlooks-signals-challenges-remain-for-u-s-not- for-profit-acutehealth- care-provi-12927513</a></li><li id="fn36"><a href="https://www.fitchratings.com/research/us-public-finance/us-not-for-profit-hospitals-health-systems-outlook-2024-05-12-2023" target="_blank">www.fitchratings.com/research/us-public-finance/us-not-for-profit-hospitals-health-systems-outlook-2024-05-12-2023</a></li><li id="fn37"><a href="https://www.kff.org/report-section/medicaid-enrollment-and-unwinding-tracker-overview/" target="_blank">ww.kff.org/report-section/medicaid-enrollment-and-unwinding-tracker-overview/</a></li><li id="fn38"><a href="/news/blog/2023-09-20-unwise-dsh-cuts-combined-rise-uncompensated-care-due-medicaid-redeterminations-coverage-losses-further" target="_blank">www.aha.org/news/blog/2023-09-20-unwise-dsh-cuts-combined-rise-uncompensated-care-due-medicaid-redeterminations-coverage-losses-further</a></li><li id="fn39"><a href="/2024-02-24-update-unitedhealth-groups-change-healthcares-continued-cyberattack-impacting-health-care-providers" target="_blank">www.aha.org/2024-02-24-update-unitedhealth-groups-change-healthcares-continued-cyberattack-impacting-health-care-providers</a></li><li id="fn40"><a href="https://apnews.com/article/hospitals-workplace-violence-shootings-aa6918569ff8f76ff8a15b9813e31686" target="_blank">apnews.com/article/hospitals-workplace-violence-shootings-aa6918569ff8f76ff8a15b9813e31686</a></li></ol></div><div class="col-md-4"><p><a href="/system/files/media/file/2024/05/Americas-Hospitals-and-Health-Systems-Continue-to-Face-Escalating-Operational-Costs-and-Economic-Pressures.pdf" target="_blank" title="Click here to download Costs of Caring 2024: America’s Hospitals and Health Systems Continue to Face Escalating Operational Costs and Economic Pressures as They Care for Patients and Communities report PDF."><img src="/sites/default/files/inline-images/Page-1-Americas-Hospitals-and-Health-Systems-Continue-to-Face-Escalating-Operational-Costs-and-Economic-Pressures.png" data-entity-uuid="4315111b-85e5-46dd-9949-8bb4ee5e6246" data-entity-type="file" alt="Costs of Caring 2024: America’s Hospitals and Health Systems Continue to Face Escalating Operational Costs and Economic Pressures as They Care for Patients and Communities page 1." width="695" height="900"></a></p><div class="external-link spacer"><a class="btn btn-wide btn-primary" href="/guidesreports/2024-09-10-skyrocketing-hospital-administrative-costs-burdensome-commercial-insurer-policies-are-impacting" target="_blank">View the Skyrocketing Hospital Administrative Costs, Burdensome Commercial Insurer Policies Are Impacting Patient Care Report</a></div><div class="external-link spacer"><a class="btn btn-wide btn-primary" href="/guidesreports/2024-05-01-2023-costs-caring" target="_blank">View the 2023 Costs of Caring Report</a></div><div class="external-link spacer"><a class="btn btn-wide btn-primary" href="/guidesreports/2023-04-20-2022-costs-caring" target="_blank">View the 2022 Costs of Caring Report</a></div><div class="external-link spacer"><a class="btn btn-wide btn-primary" href="/guidesreports/2021-10-25-2021-cost-caring" target="_blank">View the 2021 Costs of Caring Report</a></div></div></div></div> Thu, 02 May 2024 03:00:00 -0500 Workforce Supply and Demand /guidesreports/2024-05-01-2023-costs-caring <div class="container"><div class="row"><div class="col-md-8"><h2>The Financial Stability of America’s Hospitals and Health Systems Is at Risk as the Costs of Caring Continue to Rise</h2><h3>April 2023</h3></div><div class="col-md-4"><div><a class="btn btn-wide btn-primary" href="/system/files/media/file/2023/04/Cost-of-Caring-2023-The-Financial-Stability-of-Americas-Hospitals-and-Health-Systems-Is-at-Risk.pdf" target="_blank" title="Click here to download the Massive Growth in Expenses and Rising Inflation Fuel Continued Financial Challenges for America’s Hospitals and Health Systems report PDF.">Download the Report PDF</a></div><div class="external-link spacer"><a class="btn btn-wide btn-primary" href="/system/files/media/file/2023/04/Cost-of-Caring-2023-The-Financial-Stability-of-Americas-Hospitals-and-Health-Systems-Is-at-Risk-One-Pager.pdf" target="_blank" title="Click here to download the Massive Growth in Expenses and Rising Inflation Fuel Continued Financial Challenges for America’s Hospitals and Health Systems one-page overview PDF.">Download One-Page Overview PDF</a></div></div></div><div class="row"><div class="col-md-8"><p>After three years of unprecedented challenges and caring for millions of patients, including over 6 million COVID-19 patients, America’s hospitals and health systems are facing a new existential challenge — sustained and significant increases in the costs required to care for patients and communities putting their financial stability at risk.</p><p><strong>A confluence of several factors from historic inflation driving up the cost of medical supplies and equipment, to critical workforce shortages forcing hospitals to rely heavily on more expensive contract labor, led to 2022 being the most financially challenging year for hospitals since the pandemic began. Moreover, sustained demand for hospital care with patients coming to the hospital sicker and staying longer has exacerbated these challenges.</strong></p><p id="figure1"><img src="/sites/default/files/inline-images/Figure-1-Cumulative-Hospital-Expense-Growth-Is-More-Than-Double.png" data-entity-uuid="9a61fc19-9117-48c7-836b-f68e4825502a" data-entity-type="file" alt="Figure 1. Cumulative Hospital Expense Growth Is More Than Double the Cumulative Increases in Medicare IPPS Reimbursement, 2019–2022. Hospital Expense Growth: 17.5%. Medicare IPPS Reimbursement: 7.5%. Source: FY 2020–2022 IPPS Final Rule." width="50%" height="50%" class="align-right">These challenges have been particularly financially devastating for hospitals and health systems because they come on top of two years of battling the COVID-19 pandemic. Hospitals and health systems have been on the front lines delivering care to patients, acting as de facto public health agencies, and incurring significant increases in costs from a range of inputs, including labor, drugs, supplies and administrative activities associated with burdensome billing and insurance tasks. In addition, as many individuals deferred care during the pandemic, hospitals saw a dramatic rise in patient acuity. At the same time, workforce shortages across the health care continuum have left hospitals unable to discharge patients to other care settings (e.g., skilled nursing facilities) creating patient bottlenecks with hospital beds occupied without any reimbursement.</p><p>These unfortunate realities have resulted in a 17.5% increase in overall hospital expenses between 2019 and 2022, according to data from Syntellis Performance Solutions, a health care data and consulting firm. Further exacerbating the situation is the fact that the staggering expense increases have been met with woefully inadequate increases in government reimbursement. Specifically, hospital expense increases between 2019 and 2022 are more than double the increases in Medicare reimbursement for inpatient care during that same time (See <a href="#figure1">Figure 1</a>). Because of this, margins have remained consistently negative, according to Kaufman Hall’s Operating Margin Index throughout 2022 (See <a href="#figure2">Figure 2</a>). In fact, over half of hospitals ended 2022 operating at a financial loss — an unsustainable situation for any organization in any sector, let alone hospitals. So far, that trend has continued into 2023 with negative median operating margins in January and February. According to a recent analysis, the first quarter of 2023 saw the highest number of bond defaults among hospitals in over a decade.<a href="#fn1"><sup>1</sup></a> This also is one of the primary reasons that some hospitals, especially rural hospitals, have been forced to close their doors. Between 2010 and 2022, 143 rural hospitals closed — 19 of which occurred in 2020 alone.<a href="#fn2"><sup>2</sup></a><sup>,</sup><a href="#fn3"><sup>3</sup></a> Finally, despite these cost increases, hospital prices have grown modestly. In fact, in 2022, growth in general inflation (8%) was more than double the growth in hospital prices (2.9%).</p><p>This report will examine the magnitude of cost increases over the last year, and the impact these increases have had on the financial stability of the hospital field.</p><p id="figure2"><img src="/sites/default/files/inline-images/Figure-2-Kaufman-Hall-Operating-Index-YTD-by-Month.png" data-entity-uuid="55165081-b4eb-4e04-8a1c-50d909ff2763" data-entity-type="file" alt="Figure 2. Kaufman Hall Operating Index YTD by Month. January 2022: -3.4%. February 2022: -3.6%. March 2022: -2.1%. April 2022: -2.4%. May 2022: -1.9%. June 2022: -0.7%. July 2022: -1.1%. August 2022: -0.6%. September 2022: -0.4%. October 2022: -0.6%. November 2022: -0.6%. December 2022: -0.6%. January 2023: -0.8%. February 2023: -1.1%." width="1288" height="592"></p><h2>Labor Expenses</h2><div class="row"><div class="col-md-5"><p>Beginning in early 2022, the hospital field's existing workforce shortages were exacerbated with increased patient demand for hospital care due to a combination of sustained COVID-19 surges, a new virulent disease affecting primarily pediatric patients called respiratory syncytial virus (RSV), and deferred care from the early days of the pandemic. To quickly meet this demand, hospitals were increasingly forced to turn to health care staffing agencies to fill necessary gaps, especially for bedside nursing and other critical allied health professionals such as respiratory and imaging technicians.</p></div><div class="col-md-7"><blockquote><h4>Labor has been really the primary driver of our increased expenses. We've seen a 17% increase in our nursing costs, for instance, during COVID, mainly because of many nurses leaving the field and the workforce. <em>— President and CEO of a health system in the Northeast</em></h4></blockquote></div></div><p>A recent <a href="https://www.syntellis.com/sites/default/files/2023-03/AHA Q2_Feb 2023.pdf" target="_blank" title="Syntellis Hospital Vitals: Financial and Operational Trends — Workforce Pressures Take Their Toll in 2022">report by Syntellis Performance Solutions</a> found that full-time equivalents (FTEs) for hospital contract employees jumped 138.5%. This reliance on temporary contract labor came at a significant expense to hospitals, as health care staffing agencies took advantage of the situation and increased their rates to record high levels. The same report found that the rate hospitals were charged for contract employees increased 56.8% in 2022 compared to pre-pandemic levels. It is for this reason that hospitals’ contract labor expenses increased a staggering 257.9% in 2022 relative to 2019 levels (See <a href="#figure3">Figure 3</a>).</p><p advantage contract figure firms hospital id="figure3><img alt=" labor of shortages take workforce> </p><p>The explosive growth in contract labor expenses in large part fueled the 20.8% increase in overall hospital labor expenses during the same time period. Even after accounting for the fact that patient acuity (as measured by the case mix index) has increased during this period, labor expenses per patient increased 24.7%. <strong>These increases are particularly challenging, because labor on average accounts for about half of a hospital's budget.</strong></p><h2>Non-Labor Expenses</h2><p>The historic rise in inflation has been particularly challenging for hospitals and health systems as it has sparked a significant increase in non-labor expenses. As prices for essential goods such as food and clothing have seen significant price growth, so too have the prices for essential goods for hospitals such as drugs and medical supplies.<a href="#fn4"><sup>4</sup></a> A report by Kaufman Hall estimated that non-labor expenses alone would result in a one-year expense increase of $49 billion for hospitals and health systems.<a href="#fn5"><sup>5</sup></a><sup>,</sup><a href="#fn6"><sup>6</sup></a> In fact, since 2019, non-labor expenses have increased 16.6% on a per patient basis. Below, we focus on three areas of non-labor expenses that have seen tremendous cost growth:</p><ol type="I"><li><a href="#drugexpenses">Drug Expenses</a></li><li><a href="#medicalsupplies">Medical Supplies and Equipment Expenses</a></li><li><a href="#othernonlaborexpenses">Other Non-Labor Expenses such as Purchased Services Expenses</a></li></ol><h3 id="drugexpenses">I. Drug Expenses</h3><p>As hospitals and health systems faced an increasingly challenging environment due to pandemic surges as well as workforce shortages, drug companies took the opportunity to significantly raise the prices of existing drugs as well as introduce new drugs at record prices.<a href="#fn7"><sup>7</sup></a> High drug prices affect both patients directly and hospitals, especially when purchasing provider-administered drugs. In fact, for the first time in history, the median price of a new drug exceeded $200,000 — a staggering figure that implies a double-digit year-over-year price growth (See <a href="#figure4">Figure 4</a>).<a href="#fn8"><sup>8</sup></a><sup>,</sup><a href="#fn9"><sup>9</sup></a> To further contextualize these launch prices, the median new drug launch price is more than quadruple the average price of a new car and more than triple the median annual household salary ($70,784) in the United States, illustrating how unaffordable these drugs are for both providers and their patients.<a href="#fn10"><sup>10</sup></a></p><p id="figure4"><img src="/sites/default/files/inline-images/Figure-4-Launch-Prices-of-Novel-Drugs-Approved-by-FDA-Since-July-2022.png" data-entity-uuid="f7940fa1-700f-4c22-b888-d69553c830fd" data-entity-type="file" alt="Figure 4. Launch Prices of Novel Drugs Approved by FDA Since July 2022. Hemgenix: $3,500,000. Skysone: $3,000,000. Zynteglo: $2,800,000. Xenpozyme: $780,000. Rezlidhia: $386,400. Tecvayli: $375,00. Krazati: $237,000. Lylgobi: $210,006. Tzield: $193,900. Lunsumlo: $180,000. Relyvrio: $158,000. Elahere: $130,500. Sotyktu: $75,000. Briumvi: $59,000. Sunlenca: $42,250. Imjudo: $39,000. Rolvedon: $27,000. $222,003: Median price of new drug. $70,784: Median household income. $45,094: Average cost of new car. Source: Reuters survey of companies that received FDA approval for new drugs in the second half of 2022. Each bottle represents $100,000 in cost. Median household income from Census Bureau for 2021. Average price of new care from Kelley Blue Book new-vehicle average transaction price in September 2022." width="1292" height="792"></p><p>In addition, a report by the Assistant Secretary for Planning & Evaluation (ASPE) at the Department of Health and Human Services (HHS) found that drug companies increased drug prices for 1,216 drugs — many used to treat chronic conditions like cancer and rheumatoid arthritis — by more than the rate of inflation, which was 8.5% between 2021 and 2022. In fact, the average price increase for these drugs was 31.6%, with some drugs experiencing price increases as much as 500%.<a href="#fn11"><sup>11</sup></a> Moreover, recent drug shortages, specifically for certain drugs used to treat cancer, have also fueled further expense growth. It is estimated that drug shortages alone cost hospitals nearly $360 million a year.<a href="#fn12"><sup>12</sup></a></p><div class="row"><div class="col-md-4"><p>Therefore, it is no surprise, that as hospitals face the reality of operating on negative margins, drug companies are enjoying record revenues and profits. For example, some drug companies are experiencing over 200% revenue growth.<a href="#fn13"><sup>13</sup></a></p></div><div class="col-md-8"><blockquote><h4>"In the last year, we've seen double digit increases in pharmaceuticals and medical supplies. Our utility costs are up and certainly our labor costs are up." <em>— CEO of a health system in the South</em></h4></blockquote></div></div><p>For these reasons, high drug prices have been a primary driver of skyrocketing drug costs for hospitals. According to data from Syntellis Performance Solutions, hospital drug expenses per patient have increased 19.7% between 2019 and 2022. Even after accounting for the fact that patients were on average sicker (as measured by the case mix index) in 2022 than in 2019, drug expenses per patient were up over 18%. This suggests that the growth in hospital drug expenses is not primarily due to sicker patients requiring more drugs, rather it is a result of drug companies’ deliberate decisions to increase the prices of their products.</p><h3 id="medicalsupplies">II. Medical Supplies and Equipment</h3><div class="row"><div class="col-md-6"><p>While the demand for patient care has risen, so has the need for medical supplies necessary to deliver patient care and personal protective equipment (PPE) necessary to ensure the safety of both hospital staff and patients. Hospitals rely on a global supply chain for access to these supplies and equipment, and entities across the supply chain have experienced inflationary cost increases. Ongoing supply chain disruptions have led to higher manufacturing costs, packaging costs, and shipping costs, which translate into higher prices for hospitals.<a href="#fn14"><sup>14</sup></a> In fact, the National Academies recently released a report highlighting the ongoing challenges that supply chain disruptions place on providers needing to access medical supplies.<a href="#fn15"><sup>15</sup></a></p></div><div class="col-md-6"><blockquote><h4>"But in other industries like we see in our area, manufacturing, retail, hospitality, you can decide not to fill that order. You can decide to shut your restaurant down for a day. We can't do that in health care." <em>— President and CEO of a health system in the Midwest</em></h4></blockquote></div></div><p>As a direct result, hospital supply expenses per patient increased 18.5% between 2019 and 2022, outpacing increases in inflation by nearly 30%. Particularly alarming is the growth in supply costs needed for care in the emergency department — often the first level of care provided in the hospital. Hospital expenses for emergency services supplies experienced a nearly 33% increase between 2019 and 2022. These include equipment such as ventilators, respirators and other sophisticated equipment that are critical to keeping patients alive in the emergency department. As patient acuity has increased dramatically during this period, the need for these equipment to care for more complex patients also has increased.<a href="#fn16"><sup>16</sup></a> More specifically, as patients stay in the hospital longer requiring more intensive care, the amount of supplies and the type of supplies required to care for those patients become more expensive.<a href="#fn17"><sup>17</sup></a></p><h3 id="othernonlaborexpenses">III. Other Non-Labor Expenses</h3><p id="figure5"><img src="/sites/default/files/inline-images/Figure-5-Percent-Change-in-Selected-Expenses-Per-Patient-between-2019-and-2022.png" data-entity-uuid="7e28c68b-ee01-4134-b00f-d6ff74896077" data-entity-type="file" alt="Figure 5. % Change in Selected Expenses Per Patient between 2019 and 2022. Laboratory Services: 27.1%. Emergency Services: 31.9%." width="50%" height="50%" class="align-right">In addition to hospitals’ costs for drugs and medical supplies and equipment, costs for other areas that help support patient care such as purchased service expenses also have risen precipitously. This, in part, has driven clinical costs higher, making clinical services such as emergency and lab services more expensive to administer.</p><p>Purchased service expenses, which are expenses hospitals incur to create operational efficiencies such as information technology (IT), environmental services and facilities, and food and nutrition services increased 18% between 2019 and 2022. With increased patient demand and inflationary pressures, hospitals have been forced to incur additional purchased service costs as they renew and renegotiate their purchased service contracts. For example, as the cost of food has gone up over the last year, hospitals’ food services costs have grown. Specifically, food and nutrition service expenses per patient grew over 15% between 2019 and 2022.</p><p>Hospitals also have incurred increased costs in particular clinical areas. This is due to a combination of increased patient demand after many patients delayed or avoided care during the pandemic and inflationary cost growth for supplies and equipment needed to provide care. Specifically, compared to 2019 levels, laboratory service expenses per patient were up 27.1% in 2022 and emergency service expenses per patient were up 31.9%.</p><p>With hospitals bearing cost growth in many areas, they have been forced to cut costs elsewhere to stay financially afloat, and in the case of many rural hospitals, simply keep the doors open.</p><h2>Expenses from Burdensome Insurer Policies</h2><p>Notwithstanding labor and non-labor expense increases, commercial health insurer policies like unnecessary prior authorization requirements and improper claim denials continue to add significant burden for hospital staff — diverting staff time from caring for patients and contributing to clinician burnout. These practices add substantial administrative costs to the health care system by slowing down the provision of care, requiring providers to purchase additional IT tools to manage insurer requirements and necessitating the hiring of additional staff solely to manage administrative paperwork.</p><p>Administrative costs constitute as much as 31% of total health care spending — 82% of which can be attributed to billing and insurance.<a href="#fn18"><sup>18</sup></a> In a <a href="/infographics/2022-11-01-survey-commercial-health-insurance-practices-delay-care-increase-costs-infographic">recent survey fielded by the AHA</a>, 84% of hospitals reported the cost of complying with insurer policies is increasing, with 95% reporting increases in time spent seeking prior authorization approval.<a href="#fn19"><sup>19</sup></a> Even though more than half of all prior authorization denials are overturned, commercial health insurers continue to flood hospitals with prior authorization denials to the detriment of both patients and providers. This is especially egregious when prior authorization is required for widely available lifesaving medications with clear clinical indications for use, such as insulin, where the service or treatment protocol are neither new nor have a history of unwarranted variation in utilization. The AHA report also found that 50% of hospitals and health systems have more than $100 million in accounts receivables for claims that are older than six months, which impact hospitals’ cash flow and ability to weather the avalanche of cost increases they have faced. Shockingly, seven in 10 hospitals reported having an outstanding claim from 2016 or older. In addition, 35% of hospitals reported $50 million or more in foregone payments because of denied claims.</p><p id="figure6"><img src="/sites/default/files/inline-images/Figure-6-Reported-Change-in-Insurer-Required-Administrative-Tasks-for-Medical-Services.png" data-entity-uuid="f9d044f0-06a9-496f-ad07-f9354e07cb20" data-entity-type="file" alt="Figure 6. Reported Change in Insurer-Required Adminsitrative Tasks for Medical Services. Increased: 74%. No Change: 13%. Decreased: 2%. Didn't Know: 11%." width="50%" height="50%" class="align-right">A recent survey conducted by Morning Consult on behalf of the AHA found that nearly three-fourths of nurses reported increases in insurer-required administrative tasks for medical services over the last five years. Nearly 9 in 10 nurses reported insurer administrative burden had negatively impacted patient clinical outcomes (See <a href="#figure6">Figure 6</a> on next page).</p><p>Confronted by ever-growing costs, hospitals have been limited in how they can respond to the administrative burden levied by commercial health plans. Over the course of the last several years many hospitals, looking for operational efficiencies to combat rising costs, have been driven to trim down their administrative workforce.<a href="#fn20"><sup>20</sup></a> However, with a narrowing menu of options for hospitals to choose from in responding to insurer administrative expenses, 78% of hospitals report their experience with commercial health insurers is getting worse.</p><h2>Outlook for the Rest of 2023</h2><p>As the public health emergency comes to end on May 11, a number of important waivers and flexibilities also will come to an end immediately, or will sunset at the end of this year.<a href="#fn21"><sup>21</sup></a> The downstream effects of this will be wide-ranging as hospitals will be faced with a set of additional challenges. For example, with the end of the public health emergency, the continuous Medicaid enrollment provision will no longer be in effect starting April 1 meaning that states can begin dis-enrolling current Medicaid beneficiaries from the program that do not meet the state’s Medicaid enrollment criteria. According to the Kaiser Family Foundation, as many as 14 million current Medicaid beneficiaries could lose coverage over the next year.<a href="#fn22"><sup>22</sup></a> Undoubtedly, these coverage losses will drive higher rates of uninsured and underinsured individuals, raising hospitals’ uncompensated care costs and potentially negatively impacting disproportionate share payments as well as 340B program eligibility, both of which allow hospitals to offset some of the expense increases as well as furnish programs and services critical to patients. Further, the ending of regulatory relief through the 20% Medicare inpatient prospective payment system add-on payment for beneficiaries diagnosed with COVID-19 to offset the cost of highly complex care for these patients, will certainly add financial pressure to an already fragile situation for hospitals and health systems.</p><p>The combination of the impacts on hospitals of the ending public health emergency as well as continued expense growth has created an uncertain future for hospitals and health systems. A study by McKinsey on the impact of inflation and other cost pressures for the health care system projected that there would be $98 billion in additional costs between 2022 and 2023 alone, representing an astounding $248 billion increase in costs relative to 2019.<a href="#fn23"><sup>23</sup></a> In fact, their projections suggest that non-labor costs alone could increase by $112 billion by 2027. Therefore, it is no surprise, that credit rating agencies have a negative outlook for the field. For example, Moody’s has projected a negative outlook for the hospital field for 2023 due in large part to inflationary cost pressures and persisting workforce challenges.<a href="#fn24"><sup>24</sup></a></p><h2>Conclusion</h2><p>Hospitals and health systems — and their teams — are committed to providing high-quality care to all patients in every community. This steadfast commitment to caring and advancing health has never been more apparent than during the last three years battling the greatest public health crisis in a century.</p><p>However, the costs of delivering on this commitment to care have grown tremendously. As the data in this report show, 2022 brought an unprecedented set of challenges for hospitals and health systems, which has left the field in a financially unsustainable situation. These challenges are continuing in 2023.</p><p>To address these challenges and ensure hospitals have the ability to continue taking care of the sick and injured, as well as keeping people and communities healthy, congressional support and action are necessary. Among other actions, Congress should:</p><ul><li>enact policies that bolster hospitals and health systems’ efforts to support today’s workforce and ensure a future pipeline of professionals to mitigate longstanding workforce challenges and meet the nation’s increasing demands for care;</li><li>reject efforts to cut any Medicare or Medicaid payments to hospitals and health systems. Medicare and Medicaid significantly underpay the costs of providing care and further cuts could reduce access to care for patients and communities;</li><li>establish a temporary per diem payment to address a backlog in hospital patient discharges due to workforce shortages;</li><li>urge the Centers for Medicare & Medicaid Services to use its “special exceptions and adjustments” authority to make a retrospective adjustment to account for the difference between the market basket update that was implemented for fiscal year (FY) 2022 and what the market basket is currently projected to be for FY 2022; and</li><li>create a special statutory designation and provide additional support for metropolitan anchor hospitals that serve historically marginalized communities.</li></ul><p>As the hospital field maintains its commitment to care in the face of significant challenges, policymakers must step up and help protect the health and well-being of our nation by ensuring America has strong hospitals and health systems.</p><h2>Sources</h2><ol><li id="fn1"><a href="www.beckershospitalreview.com/finance/hospitals-see-most-1st-quarter-defaults-since-2011.html#:~:text=Bonds%20of%20eight%20hospitals%20lapsed,2022%2C%20according%20to%20the%20report." target="_blank">www.beckershospitalreview.com/finance/hospitals-see-most-1st-quarter-defaults-since-2011.html#:~:text=Bonds%20of%20eight%20hospitals%20lapsed,2022%2C%20according%20to%20the%20report.</a></li><li id="fn2"><a href="/2022-09-07-rural-hospital-closures-threaten-access" target="_blank">/2022-09-07-rural-hospital-closures-threaten-access</a></li><li id="fn3"><a href="https://www.shepscenter.unc.edu/programs-projects/rural-health/rural-hospital-closures/" target="_blank">https://www.shepscenter.unc.edu/programs-projects/rural-health/rural-hospital-closures/</a></li><li id="fn4"><a href="https://www.mckinsey.com/industries/healthcare/our-insights/the-gathering-storm-the-transformative-impact-of-inflation-on-the-healthcare-sector" target="_blank">https://www.mckinsey.com/industries/healthcare/our-insights/the-gathering-storm-the-transformative-impact-of-inflation-on-the-healthcare-sector</a></li><li id="fn5"><a href="/guidesreports/2022-09-15-current-state-hospital-finances-fall-2022-update" target="_blank">/guidesreports/2022-09-15-current-state-hospital-finances-fall-2022-update</a></li><li id="fn6"><a href="/system/files/media/file/2022/09/The-Current-State-of-Hospital-Finances-Fall-2022-Update-KaufmanHall.pdf" target="_blank">/system/files/media/file/2022/09/The-Current-State-of-Hospital-Finances-Fall-2022-Update-KaufmanHall.pdf</a></li><li id="fn7"><a href="/fact-sheets/2022-12-05-workforce-shortages-delay-patient-discharges-and-exacerbate-providers-severe-financial-challenges" target="_blank">/fact-sheets/2022-12-05-workforce-shortages-delay-patient-discharges-and-exacerbate-providers-severe-financial-challenges</a></li><li id="fn8"><a href="https://www.reuters.com/business/healthcare-pharmaceuticals/us-new-drug-price-exceeds-200000-median-2022-2023-01-05/#:~:text=The%20median%20annual%20price%20of,2022%2C%20the%20median%20was%20%24222%2C003." target="_blank">https://www.reuters.com/business/healthcare-pharmaceuticals/us-new-drug-price-exceeds-200000-median-2022-2023-01-05/#:~:text=The%20median%20annual%20price%20of,2022%2C%20the%20median%20was%20%24222%2C003.</a></li><li id="fn9"><a href="https://jamanetwork.com/journals/jama/article-abstract/2792986" target="_blank">https://jamanetwork.com/journals/jama/article-abstract/2792986</a></li><li id="fn10"><a href="https://www.census.gov/library/publications/2022/demo/p60-276.html#:~:text=Highlights,and%20Table%20A%2D1)." target="_blank">https://www.census.gov/library/publications/2022/demo/p60-276.html#:~:text=Highlights,and%20Table%20A%2D1).</a></li><li id="fn11"><a href="https://aspe.hhs.gov/index.php/reports/prescription-drug-price-increases" target="_blank">https://aspe.hhs.gov/index.php/reports/prescription-drug-price-increases</a></li><li id="fn12"><a href="https://www.axios.com/2023/03/21/drug-shortages-upend-cancer-treatments" target="_blank">https://www.axios.com/2023/03/21/drug-shortages-upend-cancer-treatments</a></li><li id="fn13"><a href="https://newsroom.vizientinc.com/en-US/releases/new-vizient-survey-finds-drug-shortages-cost-hospitals-just-under-360m-annually-in-labor-expenses" target="_blank">https://newsroom.vizientinc.com/en-US/releases/new-vizient-survey-finds-drug-shortages-cost-hospitals-just-under-360m-annually-in-labor-expenses</a></li><li href="https://www.beckershospitalreview.com/hospital-management-administration/supply-chain-issues-are-here-to-stay-health-leaders-share-predictions-strategies.html" target="_blank"><a href="https://www.beckershospitalreview.com/hospital-management-administration/supply-chain-issues-are-here-to-stay-health-leaders-share-predictions-strategies.html" target="_blank">https://www.beckershospitalreview.com/hospital-management-administration/supply-chain-issues-are-here-to-stay-health-leaders-share-predictions-strategies.html</a></li><li id="fn15"><a href="https://nap.nationalacademies.org/catalog/26420/building-resilience-into-the-nations-medical-product-supply-chains" target="_blank">https://nap.nationalacademies.org/catalog/26420/building-resilience-into-the-nations-medical-product-supply-chains</a></li><li id="fn16"><a href="/system/files/media/file/2022/08/pandemic-driven-deferred-care-has-led-to-increased-patient-acuity-in-americas-hospitals.pdf" target="_blank">/system/files/media/file/2022/08/pandemic-driven-deferred-care-has-led-to-increased-patient-acuity-in-americas-hospitals.pdf</a></li><li id="fn17"><a href="https://www.healthleadersmedia.com/finance/3-questions-kaufman-halls-erik-swanson-healthcare-finance-2023" target="_blank">https://www.healthleadersmedia.com/finance/3-questions-kaufman-halls-erik-swanson-healthcare-finance-2023</a></li><li id="fn18"><a href="https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2022.00241" target="_blank">https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2022.00241</a></li><li id="fn19"><a href="/infographics/2022-11-01-survey-commercial-health-insurance-practices-delay-care-increase-costs-infographic" target="_blank">/infographics/2022-11-01-survey-commercial-health-insurance-practices-delay-care-increase-costs-infographic</a></li><li id="fn20"><a href="https://www.beckershospitalreview.com/strategy/penn-medicine-eliminates-administrative-jobs-in-cost-cutting-move" target="_blank">https://www.beckershospitalreview.com/strategy/penn-medicine-eliminates-administrative-jobs-in-cost-cutting-move</a></li><li id="fn21"><a href="/special-bulletin/2023-02-07-public-health-emergency-end-may-11" target="_blank">/special-bulletin/2023-02-07-public-health-emergency-end-may-11</a></li><li id="fn22"><a href="https://www.kff.org/medicaid/issue-brief/10-things-to-know-about-the-unwinding-of-the-medicaid-continuous-enrollment-provision/" target="_blank">https://www.kff.org/medicaid/issue-brief/10-things-to-know-about-the-unwinding-of-the-medicaid-continuous-enrollment-provision/</a></li><li id="fn23"><a href="https://www.mckinsey.com/industries/healthcare/our-insights/the-gathering-storm-the-transformative-impact-of-inflation-on-the-healthcare-sector" target="_blank">https://www.mckinsey.com/industries/healthcare/our-insights/the-gathering-storm-the-transformative-impact-of-inflation-on-the-healthcare-sector</a></li><li id="fn24"><a href="https://www.moodys.com/research/Moodys-2021-outlook-for-US-not-for-profit-and-public--PBM_1256579" target="_blank">https://www.moodys.com/research/Moodys-2021-outlook-for-US-not-for-profit-and-public--PBM_1256579</a></li></ol></div><div class="col-md-4"><div><a class="btn btn-wide btn-primary" href="/system/files/media/file/2023/04/Cost-of-Caring-Toolkit.docx" target="_blank" title="Click here to download the Cost of Caring Social Media Content Toolkit DOCX.">Download the Social Media Content Toolkit</a></div><div><a class="btn btn-wide btn-primary" href="/press-releases/2023-04-20-new-aha-report-finds-financial-challenges-mount-hospitals-health-systems-putting-access-care-risk" target="_blank" title="Click here to see the New AHA Report Finds Financial Challenges Mount for Hospitals & Health Systems Putting Access to Care at Risk press release.">View the Press Release</a></div><hr><p><a href="/system/files/media/file/2023/04/Cost-of-Caring-2023-The-Financial-Stability-of-Americas-Hospitals-and-Health-Systems-Is-at-Risk.pdf" target="_blank" title="Click here to download The Financial Stability of America’s Hospitals and Health Systems Is at Risk as the Costs of Caring Continue to Rise PDF."><img src="/sites/default/files/inline-images/Page-1-Cost-of-Caring-2023-The-Financial-Stability-of-Americas-Hospitals-and-Health-Systems-Is-at-Risk.png" data-entity-uuid="d9830e92-be7e-4c72-98e3-d183d3e07ade" data-entity-type="file" alt="The Financial Stability of America’s Hospitals and Health Systems Is at Risk as the Costs of Caring Continue to Rise page 1." width="695" height="900"></a></p><div class="external-link spacer"><a class="btn btn-wide btn-primary" href="/guidesreports/2023-04-20-2022-costs-caring" target="_blank">View the 2022 Cost of Caring Report</a></div><div class="external-link spacer"><a class="btn btn-wide btn-primary" href="/guidesreports/2021-10-25-2021-cost-caring" target="_blank">View the 2021 Cost of Caring Report</a></div></div></div></div> Wed, 01 May 2024 08:59:39 -0500 Workforce Supply and Demand /aha-center-health-innovation-market-scan/2023-12-19-4-ways-build-your-talent-pipeline <div class="container"><div class="row"><div class="col-md-8"><p><img src="/sites/default/files/inline-images/4-Ways-to-Build-Your-Talent-Pipeline.png" data-entity-uuid="fc5b7259-ad24-4e76-9447-1fb317123ac0" data-entity-type="file" alt="4 Ways to Build Your Talent Pipeline. The final pipe in a Talent pipeline is craned into place." width="100%" height="381"></p><p>Clinical and nonclinical staffing remains a top concern for health care leaders. To grow and retain their workforce, hospitals and health systems need to pursue a multipronged approach, notes the AHA’s recently released <a href="/aha-workforce-scan">2024 Health Care Workforce Scan</a>.</p><p><strong>This should encompass:</strong></p><ul><li>Recruiting innovatively for clinical and nonclinical positions.</li><li>Improving training and supporting practice readiness.</li><li>Expanding career pathways.</li><li>Building workforce diversity.</li></ul><h2><span>4 Innovative Ways to Strengthen the Talent Pipeline</span></h2><p>Here are some of the innovative ways AHA members are executing a broad spectrum of strategies.</p><h3><span>1</span> <span>|</span> Partner Productively</h3><p>Baltimore County, University of Maryland St. Joseph Medical Center (UMSJMC) and Community College of Baltimore County (CCBC) have partnered to connect residents in historically underserved communities with high-demand nursing positions through customized educational programming and community wraparound support.</p><p>The Public Health Pathways Program pilot, launched this past summer, provides 30 scholarships that cover the cost of tuition and educational fees for the CCBC Certified Nursing Assistants program. Participants also receive a $1,000 monthly stipend, which they can use to supplement wages, support transportation or housing needs, pay for child care or overcome other work-related barriers.</p><p>Once students graduate from the certified nursing assistant program, UMSJMC will offer guaranteed employment with full benefits so they can continue their education in a licensed practical nursing program toward becoming an LPN. This segment includes four months of prerequisites and 16 months of LPN education. In addition, CCBC and UMSJMC will provide mentorship, tutoring and support for all participants.</p><h3><span>2</span> <span>|</span> Reconfigure Clinical Training</h3><p>A shortage of nurse preceptors is plaguing hospitals, exacerbating the challenge of onboarding new nurses. Investing in nursing educational leadership roles can supplement nursing school faculty along with strengthening the preceptor ranks. For example, Novant Health in Winston-Salem, North Carolina, has implemented a clinical teaching associate program that allows its nurses to serve as adjunct faculty for colleges seeking to expand clinical groups or class sizes.</p><p>The University of Maryland Medical System’s (UMMS) new Academy of Clinical Essentials (ACE) initiative moves even further out of the box. Piloted in April 2022, the academic practice partnership model pairs four nursing students with a UMMS-funded clinical nurse for a weekly 12-hour shift at the bedside. ACE provides a realistic clinical experience, allowing them to be immersed in all aspects of care and be accountable for patients. The program includes students from five schools in 50 cohorts across the system’s 11 hospitals.</p><p>ACE not only supports a robust recruitment pipeline, and student-to-qualified nurse pathway, it also bolsters the nurse educator ranks by offering registered nurses the best of both worlds. They can serve as clinical instructors while continuing to practice in the hospital, earning a premium when they handle ACE shifts.</p><h3><span>3</span> <span>|</span> Go Mobile</h3><p>Old Dominion University’s School of Nursing believes it makes sense to tackle two challenges with a single entrepreneurial solution. In rural communities like theirs (Southampton County, Virginia), high unemployment and poverty levels, transportation challenges and limited health care access create health disparities. This challenge is compounded by a shortage of health care preceptors, which makes it difficult for aspiring nurses to gain necessary clinical rotation experience.</p><p>Old Dominion customized a van to create a mobile health clinic, providing an opportunity for advanced practice students to work with interprofessional faculty nurse practitioner teams to bring care directly to residents. The students and faculty provide mental health, physical therapy, athletic training, dental hygiene, speech and human services. They also can draw blood and conduct testing, offer women’s health care and incorporate telehealth to connect with specialists, and monitor patients with chronic conditions.</p><p>In addition to providing high-quality medical care and building their own preceptor infrastructure, Old Dominion hopes the mobile unit experience will inspire nursing students to stay in the community to practice.</p><h3><span>4</span> <span>|</span> Purposefully Engage Teens</h3><p>Grady Health in Atlanta, the country’s fifth largest public hospital, received so many applicants for its new Teen Experience and Leadership Program that it had to turn hundreds away. The 236 high school students selected for the inaugural program this summer had the opportunity to shadow professionals in the hospital in four-hour shifts. Shifts were offered throughout the day, seven days a week, to accommodate a variety of student schedules.</p><p>Program participants — who came from a wide range of public, private and charter schools, as well as homeschooling families across metro Atlanta — could choose to rotate through units ranging from clinical to human resources, finance, legal compliance and other administrative departments. Staff were excited to have people to teach and expose to health care.</p><p>The program surpassed the organization’s expectations in several ways. Students not only were given a hands-on look at multiple health care career opportunities, but they also cultivated compassion for patients and deepened their understanding of Grady’s role in caring for community members. They often built friendships with peers different from themselves, and benefited from staff mentors willing to take them under their wings and provide life, school and career advice.</p><p><a href="/aha-workforce-scan"><strong>Download the 2024 Health Care Workforce Scan »</strong></a></p></div><div class="col-md-4"><p><a href="/center" title="Visit the AHA Center for Health Innovation landing page."><img src="/sites/default/files/inline-images/logo-aha-innovation-center-color-sm.jpg" data-entity-uuid="7ade6b12-de98-4d0b-965f-a7c99d9463c5" alt="AHA Center for Health Innovation logo" data-entity- type="file" class="align-center"></a></p><p><a href="/center/form/innovation-subscription"><img src="/sites/default/files/2019-04/Market_Scan_Call_Out_360x300.png" data-entity-uuid data-entity-type alt></a></p></div></div></div>.field_featured_image { position: absolute; overflow: hidden; clip: rect(0 0 0 0); height: 1px; width: 1px; margin: -1px; padding: 0; border: 0; } .featured-image{ position: absolute; overflow: hidden; clip: rect(0 0 0 0); height: 1px; width: 1px; margin: -1px; padding: 0; border: 0; } Tue, 19 Dec 2023 06:15:00 -0600 Workforce Supply and Demand /aha-center-health-innovation-market-scan/2023-09-26-6-ways-build-rewards-strategy-retain-nurse-managers <div class="container"> <div class="row"> <div class="col-md-8"> <p><img alt="6 Ways to Build a Rewards Strategy to Retain Nurse Managers. A nurse leader speaks with a hospital executive about nurse manager retention policies on a hospital floor." data-entity-type="file" data-entity-uuid="d7b5845d-6e27-4aee-b9ca-b12962693241" src="/sites/default/files/inline-images/6-Ways-to-Build-a-Rewards-Strategy-to-Retain-Nurse-Managers.png" width="620" height="381"></p> <p>As hospitals and health system executives refine strategies to improve recruitment and retention of nurses, particularly nurse leaders, nonsalary forms of compensation may need closer scrutiny.</p> <p>Most strategies tend to focus on role, scope, span of control, empowerment, recognition and professional development, notes the AHA’s American Organization for Nursing Leadership’s (AONL’s) <a href="https://www.aonl.org/system/files/media/file/2023/08/AONL_WorkforceCompendium.pdf" target="_blank" title="AONL: Nursing Leadership Workforce Compendium PDF.">Nursing Leadership Workforce Compendium</a>. While all are important, the evaluation of clinical practices explains that these strategies have limited impact if they do not address underlying market competitive compensation and rewards.</p> <h2><span>The Benefits Nurse Leaders Value Most</span></h2> <p>So, what do nurse leaders want most? Their most appreciated benefits include health insurance, incentive bonuses, performance incentives, retirement plans with matching funds and paid time off, data from a 2022 AONL and Deloitte Consulting LLC study showed.</p> <p>Among well-being programs, flexible scheduling was ranked as the most important benefit by a wide margin, followed by extended time-off benefits (e.g., leadership sabbatical or family leave), subsidized or free training programs, formal recognition programs, peer-support programs and spaces facilitating well-being (e.g., tranquility/lavender rooms).</p> <p>The report also underscores the importance of recognizing the complex environment nurse leaders find themselves in today. Many times, nurse managers’ total compensation is less than that of the clinical nurses they supervise, due to bonus programs, extra-shift bonuses, overtime pay and weekend, night or holiday pay differentials.</p> <p>This inequity creates dissatisfaction among nurse managers especially because they bear 24/7 accountability. And, as typically exempt employees, nurse managers often must provide bedside care due to staffing shortages and are rarely compensated for the extra hours they work, the report notes.</p> <p>As for what impact current conditions are having on nurse manager turnover and related costs, it is difficult to measure, the report states. In reviewing literature on the subject, an AONL subcommittee found only anecdotal evidence on the average cost of nurse manager turnover and the impact of turnover on clinical and organizational outcomes.</p> <h2><span>4 Ways to Supplement Your Total Rewards Program</span></h2> <ol> <li>Include <strong>development and career advancement.</strong></li> <li>Offer tuition reimbursement, allocated days off for school, minisabbaticals to pursue further learning, and organizational support for employees to publish research or to attend and speak at conferences in a formalized compensation package. This demonstrates to nurse managers that their organizations are <strong>invested in their career progressions.</strong></li> <li>Provide <strong>miniresidencies</strong> in which nurse managers are mentored by rotating nonclinical members of the organization, as well as both clinical and external mentors. This can be an effective retention tool.</li> <li>Offer <strong>“mental health days”</strong> and defined <strong>“work-at-home days,”</strong> which can significantly support nurse managers.</li> </ol> <h2><span>6 Takeaways to Bolster Your Strategy</span></h2> <ol> <li><strong>Closely track local pay trends.</strong> Market analysis for pay should be completed every six to 12 months depending on market dynamics.</li> <li><strong>Read the room.</strong> Conduct a total rewards optimization survey with nurse managers.</li> <li><strong>State your case.</strong> Produce total rewards statements to educate and highlight the total value of compensation.</li> <li><strong>Be flexible.</strong> Provide hybrid work schedules and roles for nurse managers to create opportunities to work from home.</li> <li><strong>Personalize benefits packages.</strong> This could include child and elder care benefits.</li> <li><strong>Create coverage plans.</strong> Provide an interim leader coverage plan to allow for extended time off.</li> </ol> <h2><span>Learn More</span></h2> <p>In all, AONL’s Nursing Workforce Compendium covers seven critical areas of workforce best practices and innovations to aid and support nurse managers, including talent acquisition and attraction, recruitment and retention, leadership, how to create a positive practice environment and more. <strong><a href="https://www.aonl.org/system/files/media/file/2023/08/AONL_WorkforceCompendium.pdf" target="_blank" title="Click here to download the AONL: Nursing Leadership Workforce Compendium PDF.">Download the report.</a></strong></p> </div> <div class="col-md-4"> <p><a href="/center" title="Visit the AHA Center for Health Innovation landing page."><img alt="AHA Center for Health Innovation logo" data-entity- data-entity-uuid="7ade6b12-de98-4d0b-965f-a7c99d9463c5" src="/sites/default/files/inline-images/logo-aha-innovation-center-color-sm.jpg" type="file" class="align-center"></a></p> <a href="/center/form/innovation-subscription"><img alt data-entity-type data-entity-uuid src="/sites/default/files/2019-04/Market_Scan_Call_Out_360x300.png"></a></div> </div> </div> .field_featured_image { position: absolute; overflow: hidden; clip: rect(0 0 0 0); height: 1px; width: 1px; margin: -1px; padding: 0; border: 0; } .featured-image{ position: absolute; overflow: hidden; clip: rect(0 0 0 0); height: 1px; width: 1px; margin: -1px; padding: 0; border: 0; } Tue, 26 Sep 2023 06:15:00 -0500 Workforce Supply and Demand /aha-center-health-innovation-market-scan/2023-09-12-3-takeaways-physician-compensation-trends <div class="container"> <div class="row"> <div class="col-md-8"> <p><img alt="3 Takeaways from Physician Compensation Trends. Five physicians contemplate their compensation while standing around a magnifying glass with a question mark hovering above it." data-entity-type="file" data-entity-uuid="9891e91f-e588-46c5-b1cd-063a54a93d86" src="/sites/default/files/inline-images/3-Takeaways-from-Physician-Compensation-Trends.png" width="620" height="381"></p> <p>Last December, Santa Barbara (Calif.) County’s Department of Behavioral Health and Wellness gave permission to pay $90,000 signing bonuses to attract new psychiatrists to the county and to boost psychiatrist pay by 8%. The department had been offering $75,000 bonuses since 2015, but county commissioners determined those were not persuasive enough.</p> <p>Elsewhere, some employers have offered as much as $300,000 signing bonuses for medical director jobs, while others in tight real estate markets are offering stipends to help physicians relocate, notes Leah Grant, interim president of AMN Healthcare Physician Solutions in Modern Healthcare’s recent <a href="https://www.modernhealthcare.com/providers/physician-compensation-survey-2023" target="_blank" title="Modern Healthcare: Physician compensation trends: Relocation packages, six-figure bonuses">Physician Compensation Survey</a>. The report analyzes physician compensation survey findings from nine different consulting and recruiting firms.</p> <p>Meanwhile, the average physician signing bonus jumped 21% to $37,473, according to AMN Healthcare’s <a href="https://www.amnhealthcare.com/amn-insights/physician/surveys/2023-physician-and-ap-recruiting-incentives/" target="_blank" title="AMN Healthcare: Survey: 2023 Review of Physician and Advanced Practitioner Recruiting Incentives">2023 Review of Physician and Advanced Practitioner Recruiting Incentives</a>.</p> <p>The highly competitive post-pandemic labor market, particularly for specialists, is impacting the compensation packages health care providers are offering, experts say.</p> <h2><span>3 Trends from 2023 Physician Compensation Data</span></h2> <h3><span>1</span> <span>|</span> Specialists in High Demand</h3> <p>America’s aging population continues to fuel high demand for specialty care, helping to drive up compensation. The high demand for radiologists, anesthesiologists, psychiatrists, cardiologists, gastroenterologists, orthopedic surgeons, neurologists, oncologists and others reflects the needs of an aging population that relies on specialty care, medical tests and procedures. For example, average base salaries for anesthesiologists rose 12.5% year over year while obstetricians and gynecologists saw average base pay rise 10.5%, the AMN report shows.</p> <h4><span>Takeaway</span></h4> <p>Despite offering higher compensation levels for specialists, many provider organizations are still having difficulty recruiting for these roles. Modern Healthcare’s report reveals that behavioral health practitioners, ear, nose and throat specialists and dermatologists are among the most difficult to recruit.</p> <h3><span>2</span> <span>|</span> Primary Care Physicians (PCPs) See Modest Compensation Gains</h3> <p>While demand for PCPs remains high in some regions, total compensation within the sector rose only 4.4% in 2022, according to <a href="https://www.mgma.com/data-report-provider-comp-2023" target="_blank" title="Medical Group Management Association: Provider Compensation Data Report 2023">Medical Group Management Association data</a> released in May. That’s up more than double on a percentage basis from 2021, but still below the inflation rate for 2022.</p> <h4><span>Takeaway</span></h4> <p>PCPs saw the largest pay hikes among surgical and nonsurgical specialists and advanced practice providers. Overall, however, primary care physicians remain among the lowest paid of all specialties. The market disruptors are adding to the competition for these providers, which already was strong among traditional employers like hospitals and medical groups.</p> <h3><span>3</span> <span>|</span> Quality Matters in Compensation, But How Much?</h3> <p>Metrics such as patient experience scores or timeliness in receiving care continue to be factored into compensation but these data account for only about 8% to 10% of the total for staff-level physicians across specialties, notes Dave Hesselink, managing principal at SullivanCotter.</p> <h4><span>Takeaway</span></h4> <p>Some employers are offering higher base salaries to give physicians sufficient support to focus on quality.</p> </div> <div class="col-md-4"> <p><a href="/center" title="Visit the AHA Center for Health Innovation landing page."><img alt="AHA Center for Health Innovation logo" data-entity- data-entity-uuid="7ade6b12-de98-4d0b-965f-a7c99d9463c5" src="/sites/default/files/inline-images/logo-aha-innovation-center-color-sm.jpg" type="file" class="align-center"></a></p> <a href="/center/form/innovation-subscription"><img alt data-entity-type data-entity-uuid src="/sites/default/files/2019-04/Market_Scan_Call_Out_360x300.png"></a></div> </div> </div> .field_featured_image { position: absolute; overflow: hidden; clip: rect(0 0 0 0); height: 1px; width: 1px; margin: -1px; padding: 0; border: 0; } .featured-image{ position: absolute; overflow: hidden; clip: rect(0 0 0 0); height: 1px; width: 1px; margin: -1px; padding: 0; border: 0; } Tue, 12 Sep 2023 06:15:00 -0500 Workforce Supply and Demand /press-releases/2023-09-01-aha-statement-proposed-rule-minimum-staffing-nursing-homes <p>The AHA strongly believes that a skilled, caring workforce is integral to delivery of high quality, safe care. At the same time, safe staffing is about much more than a number. It is a highly dynamic process requiring flexibility and clinical judgment that accounts for patient needs, facility characteristics and the experience and expertise of the care team. We are concerned that in proposing a one-size-fits-all numerical staffing threshold, CMS would remove the role of clinical judgment in staffing facilities, and inadvertently create patient access challenges across the health care system.</p> <p>Implementing a numerical staffing threshold could drive nursing homes to further reduce capacity or close in order to meet the requirements. Fewer nursing home beds could adversely impact hospital patients who are denied the specialized care they are prescribed when they must stay, sometimes months, in hospital beds awaiting discharge to post-acute care settings. This could become especially dire in rural and underserved communities. The AHA <a href="/system/files/media/file/2022/12/Issue-Brief-Patients-and-Providers-Faced-with-Increasing-Delays-in-Timely-Discharges.pdf">has already documented</a> rising lengths of stay for hospital patients in need of skilled post-acute care.</p> <p>The number of workers employed by nursing homes and other senior care facilities remain significantly below pre-pandemic levels largely due to challenges in finding skilled workers. We commend the Administration’s plans to invest in education for health care staff, but training takes time. We are concerned that implementing a numerical staffing threshold in two short years will not resolve the structural health care workforce shortages that have been building for more than a decade.</p> <p>The AHA looks forward to working with CMS to advance solutions to bolster the health care workforce and deliver high-quality, safe care across the health care continuum.</p> <p>###</p> <div class="row"> <div class="col-md-1"> <p>Contact:</p> </div> <div class="col-md-11"> <p>Sharon Cohen, <a href="mailto:scohen@aha.org?subject=AHA Statement on Proposed Rule on Minimum Staffing in Nursing Homes press release">scohen@aha.org</a><br /> Colin Milligan, <a href="mailto:cmilligan@aha.org?subject=AHA Statement on Proposed Rule on Minimum Staffing in Nursing Homes press release">cmilligan@aha.org</a></p> </div> </div> Fri, 01 Sep 2023 11:40:12 -0500 Workforce Supply and Demand <div class="container"> <div class="row"> <div class="col-md-8"> <p>The Centers for Medicare & Medicaid Services (CMS) Sept. 1 issued a <a href="https://public-inspection.federalregister.gov/2023-18781.pdf" target="_blank">proposed rule</a> regarding staffing requirements for nursing homes that participate in Medicare and Medicaid. CMS estimates that about 75% of nursing homes would have to increase staffing in their facilities under the proposed standards, which exceed those existing in nearly all states. Comments on the rule are due 60 days after it is published in the Federal Register.</p> <div class="panel module-typeC"> <div class="panel-heading"> <h3>Key Highlights</h3> <ul> <li>Nursing homes would have to provide a minimum of 0.55 hours of care from a registered nurse (RN) per resident day and at least 2.45 hours of care from a nurse aide per resident day</li> <li>Standards will be implemented and enforced regardless of individual facilities’ patient case mix</li> <li>An RN would be required to be on-site at all times</li> <li>Requirements to the content of nursing home care assessments would be revised</li> <li>If finalized, more than 75% of nursing facilities nationwide would have to increase their staffing</li> </ul> </div> </div> <h2>AHA Take</h2> <p>The AHA strongly believes that a skilled, caring workforce is integral to delivery of high quality, safe care. At the same time, safe staffing is about much more than a number. It is a highly dynamic process requiring flexibility and clinical judgment that accounts for patient needs, facility characteristics and the experience and expertise of the care team. We are concerned that in proposing a one-size-fits-all numerical staffing threshold, CMS would remove the role of clinical judgment in staffing facilities, and inadvertently create patient access challenges across the health care system.</p> <p>Implementing a numerical staffing threshold could drive nursing homes to further reduce capacity or close in order to meet the requirements. Fewer nursing home beds could adversely impact hospital patients who are denied the specialized care they are prescribed when they must stay, sometimes months, in hospital beds awaiting discharge to post-acute care settings. This could become especially dire in rural and underserved communities. The AHA <a href="/system/files/media/file/2022/12/Issue-Brief-Patients-and-Providers-Faced-with-Increasing-Delays-in-Timely-Discharges.pdf">has already documented</a> rising lengths of stay for hospital patients in need of skilled post-acute care.</p> <p>The number of workers employed by nursing homes and other senior care facilities remain significantly below pre-pandemic levels largely due to challenges in finding skilled workers. We commend the Administration’s plans to invest in education for health care staff, but training takes time. We are concerned that implementing a numerical staffing threshold in two short years will not resolve the structural health care workforce shortages that have been building for more than a decade.</p> <p>The AHA looks forward to working with CMS to advance solutions to bolster the health care workforce and deliver high-quality, safe care across the health care continuum.</p> <h2>Proposed Minimum Staffing Standards</h2> <p>CMS proposes to establish federal minimum nurse staffing standards for Medicare and Medicaid long-term care (LTC) facilities. Specifically, CMS proposes to require a registered nurse (RN) to be on-site 24 hours per day and seven days per week to provide skilled nursing care to all residents in accordance with resident care plans.</p> <p>CMS also proposes to require facilities to provide at minimum 0.55 RN hours per resident day (HPRD) and 2.45 nurse aide (NA) HPRD. HPRD is defined as the total number of hours worked by each type of staff divided by the total number of residents as calculated by CMS. The agency developed these standards using case-mix adjusted data sources, but notes that the standards will be implemented and enforced independent of a facility’s case mix. That means that facilities must provide at least 0.55 RN HPRD and 2.45 NA HRPD, regardless of the needs of patients in the facility.</p> <p>The agency seeks comment on whether it should also require a minimum total nurse staffing standard, which would include licensed practical and vocational nurses. In addition, CMS states that it intends to display its determinations of facility compliance with the minimum staffing standards on Care Compare and seeks comment on the most appropriate approach for doing so.</p> <p>CMS also proposes to revise existing Facility Assessment requirements by moving the regulatory language to a standalone section in the Code of Federal Regulations and modifying requirements of what the assessment must address or include to ensure that facilities have an efficient process for consistently assessing and documenting the necessary resources and staff that the facility requires. For example, CMS would require LTC facilities to incorporate the input of facility staff into their assessment and develop and maintain plans to maximize recruitment and retention of direct-care staff.</p> <h2>Proposed Implementation Policies</h2> <p>CMS proposes to stagger the implementation dates of these requirements to allow facilities time to prepare. Specifically, the agency proposes timing for the following provisions:</p> <ul> <li>24/7 onsite RN staffing would take effect two years after publication of the final rule (or three years for rural facilities); and</li> <li>minimum HPRD standards for RN and NA would take effect three years after publication of the final rule (or five years for rural facilities).</li> </ul> <p>CMS would allow exemptions to the proposed minimum HPRD standards in limited circumstances where all four of the following criteria are met:</p> <ol> <li>Workforce is unavailable or the facility is at least 20 miles from another long-term care facility, as determined by CMS.</li> <li>The facility is making a good-faith effort to hire and retain staff.</li> <li>The facility provides documentation of its financial commitment to staffing.</li> <li>The facility has not failed to submit payroll-based journal data in accordance with federal regulations; is not a Special Focus Facility; has not been cited for widespread or a pattern of insufficient staffing with resultant resident actual harm; and has not been cited at the “immediate jeopardy” level of severity with respect to insufficient staffing within the 12 months preceding the survey during which the facility’s non-compliance is identified.</li> </ol> <p>If finalized, CMS may impose enforcement actions (or “remedies”) against LTC facilities deemed non-compliant, including termination of the provider agreement, denial of payment for all Medicare and/or Medicaid individuals by CMS, and/or civil monetary penalties.</p> <h2>State Medicaid Agencies</h2> <p>CMS also proposes new regulations that would require states’ Medicaid agencies to report on the percent of payments for Medicaid-covered services in nursing facilities and intermediate care facilities for individuals with intellectual disabilities that are spent on compensation for direct-care workers and support staff. The agency believes this would inform efforts to address the link between payment to institutional direct care and support staff and access to/quality of services for Medicaid beneficiaries</p> <h2>Further Questions</h2> <p>Please contact Caitlin Gillooley, AHA’s director of behavioral health and quality policy, at <a href="mailto:cgillooley@aha.org?subject=Question on Special Bulletin: CMS Issues Proposed Rule on Minimum Staffing in Nursing Homes">cgillooley@aha.org</a> or <a href="tel:1-202-626-2267">202-626-2267</a> with any questions.</p> </div> <div class="col-md-4"> <p><a href="/system/files/media/file/2023/09/Special-Bulletin-CMS-Issues-Proposed-Rule-on-Minimum-Staffing-in-Nursing-Homes.pdf" target="_blank" title="Click here to download the Special Bulletin: CMS Issues Proposed Rule on Minimum Staffing in Nursing Homes PDF."><img alt="Special Bulletin: Special Bulletin: CMS Issues Proposed Rule on Minimum Staffing in Nursing Homes page 1." data-entity-type="file" data-entity-uuid="26a2a5f8-74f0-4898-b511-4bc8c86dd272" src="/sites/default/files/inline-images/Page-1-Special-Bulletin-CMS-Issues-Proposed-Rule-on-Minimum-Staffing-in-Nursing-Homes.png" width="695" height="900"></a></p> </div> </div> </div> Fri, 01 Sep 2023 11:08:07 -0500 Workforce Supply and Demand /advancing-health-podcast/2023-04-24-how-one-hospital-navigating-rising-inflation-and-workforce-pressures <p>The financial stability of America's hospitals and health systems is at risk as the costs of caring continue to rise. According to a recent <a href="/costsofcaring" target="_blank">AHA report</a>, the cost of drugs, supplies and labor has skyrocketed over the past few years, and that's been met with continued underpayments from government payers. In this podcast, the AHA's Bharath Krishnamurthy, director of Health Analytics and Policy, explores what this imbalance means for patient care with Dr. Anthony Coleman, President and Chief executive officer of Broadlawns Medical Center in Iowa. This podcast was recorded at the 2023 şÚÁĎŐýÄÜÁż Association's annual membership meeting in Washington, D.C.</p> <hr /> <p></p> <div><a href="https://soundcloud.com/advancinghealth" target="_blank" title="Advancing Health">Advancing Health</a> · <a href="https://soundcloud.com/advancinghealth/ahadc004-bharath-krishnamurthy-and-dr-tony-coleman" target="_blank" title="How One Hospital is Navigating Rising Inflation and Workforce Pressures">How One Hospital is Navigating Rising Inflation and Workforce Pressures</a></div> Mon, 24 Apr 2023 11:26:39 -0500 Workforce Supply and Demand