/ en Sat, 26 Apr 2025 07:36:58 -0500 Wed, 01 May 24 08:59:39 -0500 /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 COVID-19: Supplies and Personal Protective Equipment (PPE) /news/headline/2023-11-10-fda-approves-covid-19-antigen-test-first-chikungunya-vaccine <p>The Food and Drug Administration Nov. 9 cleared for <a href="https://www.fda.gov/news-events/press-announcements/fda-clears-first-covid-19-home-antigen-test" target="_blank">marketing</a> the Flowflex COVID-19 Antigen Home Test, the first COVID-19 antigen test and second COVID-19 at-home test to successfully complete traditional premarket review.</p> <p>In other news, the agency yesterday <a href="https://www.fda.gov/news-events/press-announcements/fda-approves-first-vaccine-prevent-disease-caused-chikungunya-virus" target="_blank">approved</a> the first chikungunya vaccine for adults at increased risk of exposure to the virus, primarily through travel to regions of Africa, Southeast Asia and the Americas where mosquitos carry the virus. The Centers for Disease Control and Prevention last year <a href="https://www.cdc.gov/chikungunya/geo/chikungunya-in-the-us.html" target="_blank">reported</a> 81 travel-associated cases. Locally acquired cases were reported in Florida in 2014 and Texas in 2015.</p> Fri, 10 Nov 2023 13:48:23 -0600 COVID-19: Supplies and Personal Protective Equipment (PPE) /news/headline/2023-09-21-hhs-awards-600m-make-covid-19-tests-public-can-order-4-more-free <p>The Department of Health and Human Services’ Administration for Strategic Preparedness and Response yesterday awarded $600 million for 12 domestic COVID-19 test <a href="https://www.hhs.gov/about/news/2023/09/20/biden-harris-administration-awards-600-million-bolster-us-manufacturing-covid-19-tests-announces-re-opening-covidtestsgov.html" target="_blank">manufacturers</a> to expand capacity. On Monday, the agency will begin accepting mail <a href="https://www.covid.gov/tests" target="_blank">orders</a> for four free at-home tests per household that can detect the currently circulating variants.</p> Thu, 21 Sep 2023 15:06:34 -0500 COVID-19: Supplies and Personal Protective Equipment (PPE) /news/headline/2023-05-19-niosh-revokes-respirators-temporarily-approved-covid-19-phe <p>The National Institute for Occupational Safety and Health this week <a href="https://www.cdc.gov/niosh/npptl/resources/pressrel/lettesrs/respprotect/CA-2023-1059.html" target="_blank">revoked</a> eight N95 filtering facepiece respirator approvals and four powered air-purifying respirator approvals issued for the COVID-19 public health emergency that ended May 11, meaning health care providers may no longer use them.</p> Fri, 19 May 2023 14:16:12 -0500 COVID-19: Supplies and Personal Protective Equipment (PPE) /news/headline/2023-04-24-fda-updates-use-recommendations-halyard-surgical-n95-respirator <p>In response to questions from AHA and others and informed by testing results, the Food and Drug Administration April 21 <a href="https://www.fda.gov/medical-devices/safety-communications/risk-protection-failure-certain-om-halyard-surgical-n95-respirators-surgical-masks-and-pediatric">announced</a> that health care providers without alternative options may continue to use a certain version of the O&M Halyard FLUIDSHIELD Surgical N95 Respirator Mask for fluid barrier protection if they wear a face shield over the respirator. </p> <p>The agency April 12 <a href="/news/headline/2023-04-12-fda-dont-use-certain-n95-respirators-and-masks-made-om-halyard">announced</a> () that health care providers and consumers should not use certain N95 respirators made by O&M Halyard because they do not meet quality and performance expectations, and should not use certain surgical masks and pediatric face masks made by the company for fluid barrier protection. FDA continues to evaluate quality and performance information for these products and will provide updates as more information becomes available. The agency said it also continues to work with providers to assist with challenges and can help them find alternative sources and products. </p> Mon, 24 Apr 2023 15:56:34 -0500 COVID-19: Supplies and Personal Protective Equipment (PPE) /guidesreports/2023-04-20-2022-costs-caring <div class="container"> <div class="row"> <div class="col-md-8"> <h2>Introduction</h2> <p>For over two years since the outset of the COVID-19 pandemic, America’s hospitals and health systems have been on the front lines caring for patients, comforting families and protecting communities.</p> <p>With over 80 million cases<sup><a href="#fn1">1</a></sup>, nearly 1 million deaths<sup><a href="#fn2">2</a></sup>, and over 4.6 million hospitalizations<sup><a href="#fn3">3</a></sup>, the pandemic has taken a significant toll on hospitals and health systems and placed enormous strain on the nation’s health care workforce. During this unprecedented public health crisis, hospitals and health systems have confronted many challenges, including historic volume and revenue losses, as well as skyrocketing expenses (<a href="#figure1">See Figure #1</a>).</p> <p><img alt="Figure #1: Increase in Hospital Expenses Per Patient from 2019 to 2021. Drug: 36.9%. Labor: 19.1%. Supply: 20.6%. Total: 20.1%. Source: January 2022 Kaufman Hall National Hospital Flash Report." data-entity-type="file" data-entity-uuid="650de08c-92ad-4b43-a4de-5626955ff31a" src="/sites/default/files/inline-images/Figure-1-Increase-in-Hospital-Expenses-Per-Patient-2019-2021.jpg" width="457" height="392" class="align-right"><a id="figure1" name="figure1"></a>Hospitals and health systems have been nimble in responding to surges in COVID-19 cases throughout the pandemic by expanding treatment capacity, hiring staff to meet demand, acquiring and maintaining adequate supplies and personal protective equipment (PPE) to protect patients and staff and ensuring that critical services and programs remain available to the patients and communities they serve. However, these and other factors have led to billions of dollars in losses over the last two years for hospitals, and over 33% of hospitals are operating on negative margins.</p> <p>The most recent surges triggered by the delta and omicron variants have added even more pressure to hospitals. During these surges, hospitals saw the number of COVID-19 infected patients rise while other patient volumes fell, and patient acuity increased. This drove up expenses and added significant financial pressure for hospitals. Moreover, hospitals did not receive any government assistance through the COVID-19 Provider Relief Fund (PRF) to help mitigate rising expenses and lost revenues during the delta and omicron surges. This is despite the fact that more than half of COVID-19 hospitalizations have occurred since July 1, 2021, during these two most recent COVID-19 surges.</p> <p>At the same time, patient acuity has increased, as measured by how long patients need to stay in the hospital. The increase in acuity is a result of the complexity of COVID-19 care, as well as treatment for patients who may have put off care during the pandemic. The average length of a patient stay increased 9.9% by the end of 2021 compared to pre-pandemic levels in 2019.<sup><a href="#fn4">4</a></sup></p> <p>As hospitals treat sicker patients requiring more intensive treatment, they also must ensure that sufficient staffing levels are available to care for these patients, and must acquire the necessary expensive drugs and medical supplies to provide high-quality care. As a result, overall hospital expenses have experienced considerable growth.</p> <p>Data from Kaufman Hall, a consulting firm that tracks hospital financial metrics, shows that by the end of 2021, total hospital expenses were up 11% compared to pre-pandemic levels in 2019. Even after accounting for changes in volume that occurred during the pandemic, hospital expenses per patient increased significantly from pre-pandemic levels across every category. (<a href="#figure1">See Figure #1</a>)</p> <p>The pandemic has strained hospitals’ and health systems’ finances. Many hospitals operate on razorthin margins, so even slight increases in expenses can have dramatic negative effects on operating margins, which can jeopardize their ability to care for patients. These expense increases have been more challenging to withstand in light of rising inflation and growth in input prices. In fact, despite modest growth in revenues compared to pre-pandemic levels, median hospital operating margins were down 3.8% by the end of 2021 compared to pre-pandemic levels, according to Kaufman Hall. Further exacerbating the problem for hospitals are Medicare sequestration cuts and payment increases that are well below increases in costs. For example, an analysis by PINC found that for fiscal year 2022, hospitals received a 2.4% increase in their Medicare inpatient payment rate, while hospital labor rates increased 6.5%.<sup><a href="#fn5">5</a></sup></p> <p>These levels of increased expenses and declines in operating margins are not sustainable. This report highlights key pressures currently facing hospitals and health systems, including:</p> <ol> <li><a href="#iworkforce">Workforce and contract labor expenses</a></li> <li><a href="#iidrug">Drug expenses</a></li> <li><a href="#iiimedical">Medical supply and PPE expenses</a></li> <li><a href="#iimpact">Rising economy-wide inflation</a></li> </ol> <p>Each of these issues separately presents significant challenges to the hospital field. Taken together, they represent conditions that would be potentially catastrophic for most organizations, institutions and industries. However, the fact that the nation’s hospitals and health systems continue to serve on the front lines of the ongoing pandemic is a testament to their resiliency and steadfast commitment to their mission to serve patients and communities around the country.</p> <p>Hospitals and health systems are the cornerstones of their communities. Their patients depend on them for access to care 24 hours a day, seven days a week. Hospitals are often the largest employers in their community, and large purchasers of local services and goods. Additional support is needed to help ensure hospitals have the adequate resources to care for their communities.</p> <h2 id="iworkforce">I. Workforce and Contract Labor Expenses</h2> <p>The hospital workforce is central to the care process and often the largest expense for hospitals. It is no surprise then that even before the pandemic, labor costs — which include costs associated with recruiting and retaining employed staff, benefits and incentives — accounted for more than 50% of hospitals’ total expenses. Therefore, even a slight increase in these costs can have significant impacts on a hospital’s total expenses and operating margins.</p> <p>As the pandemic has persisted for over two years, the toll on the health care workforce has been immense. A recent survey of health care workers found that approximately half of respondents felt “burned out” and nearly a quarter of respondents said they anticipated leaving the health care field.<sup><a href="#fn6">6</a></sup></p> <p>This has been mirrored by a significant and sustained decline in hospital employment, down approximately 100,000 employees from pre-pandemic levels.<sup><a href="#fn7">7</a></sup> At the height of the omicron surge, approximately 1,400 hospitals or 30% of all U.S. hospitals reporting data to the government, indicated that they anticipated a critical staffing shortage within the week.<sup><a href="#fn8">8</a></sup> This high percentage of hospitals reporting a critical staffing shortage stayed relatively consistent throughout the delta and omicron surges.</p> <p><img alt="Figure #2: Number of Unique Job Postings for Travel Nurses. January 2019: 14,328. January 2022: 31,309. AHA Analysis of Emsi Burning Glass Market Analytics, 2022. (Emsi Burning Glass — economicmodeling.com)" data-entity-type="file" data-entity-uuid="219b4bca-0e69-405d-bfc2-1ca7737bfa8a" src="/sites/default/files/inline-images/Figure-2-Number-of-Unique-Job-Postings-for-Travel-Nurses.jpg" width="417" height="431" class="align-right"><a id="figure2" name="figure2"></a>The combination of employee burnout, fewer available staff, increased patient acuity and higher demand for care especially during the delta and omicron surges, has forced hospitals to turn to contract staffing firms to help address staffing shortages.</p> <p>Though hospitals have long worked with contract staffing firms to bridge temporary gaps in staffing, the pandemic-driven-staffing-shortage has created an expanded reliance on contract staff, especially contract or travel registered nurses. Travel nurses are in particularly high demand because they serve a critical role in delivering care for both COVID-19 and non-COVID-19 patients and allow the hospital to meet the demand for care, especially during pandemic surges.</p> <p>According to a survey by AMN Healthcare, one of the nation’s largest health care staffing agencies, 95% of health care facilities reported hiring nurse staff from contract labor firms during the pandemic.<sup><a href="#fn9">9</a></sup> Staffing firms have increased their recruitment of contract or travel nurses, illustrating the significant growth in their demand. According to data from EMSI/Burning Glass, there has been a nearly 120% increase in job postings for contract or travel nurses from pre-pandemic levels in January 2019 to January 2022. (<a href="#figure2">See Figure #2</a>)</p> <p>Similarly, the hours worked by contract or travel nurses as a percentage of total hours worked by nurses in hospitals has grown from 3.9% in January 2019 to 23.4% in January 2022, according to data from Syntellis Performance Solutions. (<a href="#figure3">See Figure #3</a>) In fact, a quarter of hospitals have experienced nearly a third of their total nurse hours accounted for by contract or travel nurses.</p> <p><img alt="Figure #3: Contract RN as a % of Total RN Worked Hours and Paid Dollars. January 2019: Contract RN 4.7% of Total RN Paid Dollars; Contract RN 3.9% of Total RN Worked Hours. January 2022: Contract RN 38.6% of Total RN Paid Dollars; Contract RN 23.4% of Total RN Worked Hours. Analysis conducted by Syntellis Performance Solutions." data-entity-type="file" data-entity-uuid="a7962291-12e2-4466-bc74-74a1e96e4f66" src="/sites/default/files/inline-images/Figure-3-Contract-RN-as-Percentage-of-Total-RN-Worked-Hours-Paid-Dollars.jpg" width="540" height="368" class="align-right"><a id="figure3" name="figure3"></a>As the share of contract travel nurse hours has grown significantly compared to before the pandemic, so too have the costs of employing travel nurses compared to pre-pandemic levels. In 2019, hospitals spent a median of 4.7% of their total nurse labor expenses for contract travel nurses, which skyrocketed to a median of 38.6% in January 2022. (<a href="#figure3">See Figure #3</a>) A quarter of hospitals — those who have had to rely disproportionately on contract travel nurses — saw their costs for contract travel nurses account for over 50% of their total nurse labor expenses. In fact, while contract travel nurses accounted for 23.4% of total nurse hours in January 2022, they accounted for nearly 40% of the labor expenses for nurses. (<a href="#figure3">See Figure #3</a>) This difference has grown considerably compared to pre-pandemic levels in 2019, suggesting that the exorbitant prices charged by staffing companies are a primary driver of higher labor expenses for hospitals.</p> <p>Data from Syntellis Performance Solutions show a 213% increase in hourly rates charged to hospitals by staffing companies for travel nurses in January 2022 compared to pre-pandemic levels in January 2019. This is because staffing agencies have exploited the situation by increasing the hourly rates billed to hospitals for contract travel nurses more than the hourly rates they pay to travel nurses. This is effectively the “margin” retained by the staffing agencies. During pre-pandemic levels in 2019, the average “margin” retained by staffing agencies for travel nurses was about 15%. As of January 2022, the average “margin” has grown to an astounding 62%. (<a href="#figure4">See Figure #4</a>)</p> <p><a href="https://welch.house.gov/sites/welch.house.gov/files/WH%20Nurse%20Staffing.pdf" target="_blank" title="Letter from Rep. Peter Welch and Rep. H. Morgan Griffith to Mr. Jeffrey Zients, COVID-19 Response Team Coordinator."><img alt="Figure #4: Differences in Advertised Pay Rates and Billed Rates for Contract RNs by Staffing Agencies. January 2019: 15%. January 2022: 62%. Advertised travel nurse data taken from Emsi Burning Glass Market Analytics, 2022. (Emsi Burning Glass — economicmodeling.com) Hospital billed rate data taken from analysis conducted by Syntellis Performance Solutions. Note that these sources contain different sample sizes and the graph was produced by the AHA. These numbers are in-line with other reports of staffing agency markups of rates they bill hospitals vs. advertised rates paid to contract nurses." data-entity-type="file" data-entity-uuid="09e82795-b11c-49b8-939c-2889076e8f68" src="/sites/default/files/inline-images/Figure-4-Differences-in-Advertised-Pay-Rates-and-Billed-Rates-Contract-RNs.jpg" width="542" height="417" class="align-right"></a><a id="figure4" name="figure4"></a>These high “margins” have fueled massive growth in the revenues and profits of health care staffing companies. Several staffing firms have reported significant growth in their revenues to as high as $1.1 billion in just the fourth quarter of 2021<sup><a href="#fn10">10</a></sup>, tripling their revenues and net income compared to 2020 levels.<sup><a href="#fn11">11</a></sup></p> <p>The data indicate that the growth in labor expenses for hospitals and health systems was in large part due to the exorbitant rates charged by contract staffing firms. By the end of 2021, hospital labor expenses per patient were 19.1% higher than pre-pandemic levels, and increased to 57% at the height of the omicron surge in January 2022.<sup><a href="#fn12">12</a></sup> A study looking at hospitals in New Jersey found that the increased labor expenses for contract staff amounted to $670 million in 2021 alone, which was more than triple what their hospitals spent in 2020.<sup><a href="#fn13">13</a></sup> High reliance on contract or travel staff prevents hospitals and health systems from investing those costs into their existing employees, leading to low morale and high turnover, which further exacerbates the challenges hospitals and health systems have been facing.</p> <h2 id="iidrug">II. Drug Expenses</h2> <p><img alt="Figure #5: Hospitals' Drug Expenses as a Share of Non-Labor Expenses. 8.2% in January 2019; 7.9% in December 2019. 9.3% in January 2021; 10.5% in December 2021. 10.6% in January 2022. Source: Syntellis Performance Solutions. " data-entity-type="file" data-entity-uuid="1d698d46-a0c4-4430-ac68-652f4db6a9d1" src="/sites/default/files/inline-images/Figure-5-Hospitals-Drug-Expenses-as-Share-of-Non-Labor-Expenses_1.jpg" width="542" height="374" class="align-right"><a id="figure5" name="figure5"></a>Prescription drug spending in the U.S. has grown significantly since the pandemic. In 2021, drug spending (including spending in both retail and non-retail settings) increased 7.7%<sup><a href="#fn14">14</a></sup>, which was on top of an increase of 4.9%<sup><a href="#fn15">15</a></sup> in 2020. While some of this growth can be attributed to increased utilization as patient acuity increased during the pandemic, a significant driver has been the continued increase in prices of existing drugs as well as the introduction of new products at very high prices. A study by GoodRx found that in January 2022 alone, drug companies increased the price of about 810 brand and generic drugs that they reviewed by an average of 5.1%.<sup><a href="#fn16">16</a></sup> These price increases followed massive price hikes for certain drugs often used in the hospital such as Hydromorphone (107%), Mitomycin (99%), and Vasopressin (97%).<sup><a href="#fn17">17</a></sup> For another example, the drug manufacturer of Humira, one of the most popular brand drugs used to treat rheumatoid arthritis, increased the price of the drug by 21% between 2019 and 2021.<sup><a href="#fn18">18</a></sup> A study by the Kaiser Family Foundation found that in Medicare Part B and D markets, half of all drugs in each market experienced price increases above the rate of inflation between 2019 and 2020 – in fact, a third of these drugs experienced price increases of greater than 7.5%.<sup><a href="#fn19">19</a></sup> At the same time, according to a report by the Institute for Clinical and Economic Review (ICER), eight drugs with unsupported U.S. drug price increases between 2019 and 2020 alone accounted for an additional $1.67 billion in drug spending, further illustrating that drug companies’ decisions to raise the prices of their drugs are simply an unsustainable practice.<sup><a href="#fn20">20</a></sup></p> <p>As hospitals have worked to treat sicker patients during the pandemic, they have been forced to contend with sky-high prices for drugs, many of which are critical and lifesaving for their patients. For example, in 2020, 16 of the top 25 drugs by spending in Medicare Part B (hospital outpatient settings) had price increases greater than inflation — two of the top three drugs, Keytruda and Prolia — experienced price increases of 3.3% and 4.1%, respectively.<sup><a href="#fn29">21</a></sup></p> <p>As a result of these price increases, hospital drug expenses have skyrocketed. By the end of 2021, total drug expenses were 28.2% higher than pre-pandemic levels.<sup><a href="#fn29">22</a></sup> When taken as a share of all non-labor expenses, drug expenses have grown from approximately 8.2% in January 2019, to 9.3% in January 2021, and to 10.6% in January 2022. (<a href="#figure5">See Figure #5</a>) Even when considering changes in volume during the pandemic, drug expenses per patient compared to pre-pandemic levels in 2019 saw significant increases, with a 36.9% increase through 2021.</p> <p>While continued drug price increases by drug companies have been a major driver of the growth in overall hospital drug expenses, there also are other important driving factors to consider:</p> <ul> <li><strong>Drug Treatments for COVID-19 Patients:</strong> <em>Remdesivir,</em> one of the primary drugs used to treat COVID-19 patients in the hospital, has become the top spend drug for most hospitals since the pandemic. This drug alone accounted for over $1 billion in sales in the fourth quarter of 2021.<sup><a href="#fn23">23</a></sup> Priced at an average of $3,120<sup><a href="#fn24">24</a></sup>, <em>Remdesivir’s</em> cost was initially covered by the federal government. However, hospitals must now purchase the drug directly.</li> <li><strong>Limitation of 340B Contract Pharmacies:</strong> The 340B program allows eligible providers, including hospitals that treat many low-income patients or treat certain patient populations like children and cancer patients, to buy certain outpatient drugs at discounted prices and use those savings to provide more comprehensive services to the patients and communities they serve. Since July 2020, several of the largest drug manufacturers have denied 340B pricing to eligible hospitals through pharmacies with whom they contract, despite calls from the Department of Health and Human Services that such actions are illegal. Because of these actions, many 340B hospitals, especially rural hospitals who disproportionately rely on contract pharmacies to ensure access to drugs for their patients, have lost millions in 340B drug savings.<sup><a href="#fn25">25</a></sup> In addition, these manufacturers have required claim-level data submissions as a condition of receiving 340B discounts, which has increased costs to deliver the data as well as staff time and expense to manage that process. The loss of 340B savings coupled with increased burden of providing detailed data to drug companies have contributed to increasing drug expenses.</li> <li><strong>Health Plans’/Pharmacy Benefit Managers’ (PBMs’) “White Bagging” Policies:</strong> Health plans and PBMs have engaged in a tactic that steers hospital patients to third-party specialty pharmacies to acquire medication necessary for clinician-administered treatments, known as “white-bagging.” This practice disallows the hospital from procuring and managing the handling of a drug — typically drugs that are infused or injected requiring a clinician to administer in a hospital or clinic setting — used in patient care. These policies not only create serious patient safety concerns, but create delays and risks in patient care; add to administration, storage and handling costs; and create important liability issues for hospitals.</li> </ul> <p>Taken together, these factors increase both drug expenses and overall hospital expenses.</p> <h2 id="iiimedical">III. Medical Supply and PPE Expenses</h2> <p>The U.S., like most countries in the world, relies on global supply chains for goods and services. This is especially true for medical supplies used at hospitals and other health care settings. Everything from the masks and gloves worn by staff to medical devices used in patient care come from a large network of global suppliers. Prior to the global pandemic, hospitals had established relationships with distributors and other vendors in the global health care supply chain to deliver goods as necessitated by demand. After the pandemic hit, many factories, distributors and other vendors shut down their operations, leaving hospitals, which were on the front lines facing surging demand, to fend for themselves. In fact, supply chain disruptions across industries, including health care, increased by 67% in 2020 alone.<sup><a href="#fn26">26</a></sup></p> <p>As a result, hospitals turned to local suppliers and non-traditional suppliers, often paying significantly higher rates than they did prior to the pandemic. Between fall 2020 and early 2022 costs for energy, resins, cotton and most metals surged in excess of 30%; these all are critical elements in the manufacturing of medical supplies and devices used every day in hospitals.<sup><a href="#fn27">27</a></sup> As COVID-19 cases surged, demand for hospital PPE, such as N95 masks, gloves, eye protection and surgical gowns, increased dramatically causing hospitals to invest in acquiring and maintaining reserves of these supplies. Further, downstream effects from other global events such as the war in Ukraine and the energy crisis in China, as well as domestic issues, such as labor shortages and rising fuel and transportation costs, have all contributed to drive up even higher overall medical supply expenses for hospitals in the U.S.<sup><a href="#fn28">28</a></sup> For instance, according to the Health Industry Distributors Association, transportation times for medical supplies are 440% longer than pre-pandemic times resulting in massive delays.<sup><a href="#fn29">29</a></sup></p> <p><img alt="Figure #6: Increase in Medical Supply Expenses in 2021 Compared to 2019 Baseline. ICU Medical Supplies: 31.5%. ICU Medical Supplies Per Patient: 31.8%. Respiratory Care Medical Supplies Expense: 22.3%. Respiratory Care Medical Supplies Expense Per Patient: 25.9%. Source: Syntellis Performance Solutions." data-entity-type="file" data-entity-uuid="162238e8-8b87-485b-bdef-dd54ff118e5c" src="/sites/default/files/inline-images/Figure-6-Increase-in-Medical-Supply-Expenses-in-2021-2019.jpg" width="525" height="313" class="align-right"><a id="figure6" name="figure6"></a>Compared to 2019 levels, supply expenses for hospitals were up 15.9%<sup><a href="#fn30">30</a></sup> through the end of 2021. When focusing on hospital departments involved most directly in care for COVID-19 patients − primarily hospital intensive care units (ICUs) and respiratory care departments − the increase in expenses is significantly higher. Medical supply expenses in ICUs and respiratory care departments increased 31.5% and 22.3%, respectively. Further, accounting for changes in volume during surge and non-surge periods of the pandemic, medical supply expenses per patient in ICUs and respiratory care departments were 31.8% and 25.9% higher, respectively. (<a href="#figure6">See Figure #6</a>) These numbers help illustrate the magnitude of the impact that increases in supply costs have had on hospital finances during the pandemic.</p> <h2 id="ivimpact">IV. Impact of Rising Inflation</h2> <p>Higher economy-wide costs have serious implications for hospitals and health systems, increasing the pressures of higher labor, supply, and acquisition costs; and potentially lower consumer demand. Inflation is defined as the general increase in prices and the decrease in purchasing power. It is measured by the Consumer Price Index (CPI-U). In April 2021, the Bureau of Labor Statistics (BLS) reported that the CPI-U had the largest 12-month increase since September 2008. The CPI-U hit 40-year highs in February 2022.<sup><a href="#fn31">31</a></sup> Overall, consumer prices rose by a historic 8.5% on an annualized basis in March 2022 alone.<sup><a href="#fn32">32</a></sup></p> <p>As inflation measured by consumer prices is at record highs, below are key considerations on the potential impact of higher general inflation on hospital prices:</p> <ul> <li><strong>Labor Costs and Retention:</strong> Labor costs represent a significant portion of hospital costs (typically more than 50% of hospital expenses are related to labor costs). As the cost-of-living increases, employees generally demand higher wages/total compensation packages to offset those costs. This is especially true in the health care sector, where labor demands are already high, and labor supply is low.</li> <li><strong>Supply Chain Costs:</strong> Medical supplies account for approximately 20% of hospital expenses, on average. As input/raw good costs increase due to general inflation, hospital supplies and medical device costs increase as well. Furthermore, shortages of raw materials, including those used to manufacture drugs, could stress supply chains (i.e., medical supply shortages), which may result in changes in care patterns and add further burden on staff to implement work arounds.</li> <li><strong>Capital Investment Costs:</strong> Capital investments also may be strained, especially as hospitals have already invested heavily in expanding capacity to treat patients during the pandemic (e.g., constructing spaces for testing and isolation of COVID-19 patients). One of the areas that has seen the largest increase in prices/shortages is building materials (e.g., lumber). Additionally, a historically large increase in inflation has resulted in increases in interest rates, which may hamper borrowing options and add to overall costs.</li> <li><strong>Consumer Demand:</strong> Higher inflation also may result in decreases in demand for health care services, specifically if inflation exceeds wage growth. Specifically, higher costs for necessities (food, transportation, etc.) could push down demand for health care services and, in turn, dampen hospital volumes and revenues in the long run.</li> </ul> <p><img alt="Figure #7: Health Insurance premiums have constantly grown faster than hospital prices over the last decade. Source: Health insurance premiums represent premiums for a family of four, from KFF Employer Health Benefits Survey, 2018–2021, and Kaiser/HRET Survey of Employer Health Benefits (2012–2017). Hospital prices: Bureau of Labor Statistics, annual average Producer Price Index data, 2012–2021 for Hospitals (series ID 622)." data-entity-type="file" data-entity-uuid="ae3db075-0746-4d0e-837f-4f13c858a80c" src="/sites/default/files/inline-images/Figure-7-Health-Insurance-Premiums-Have-Constantly-Grown-Faster-Than-Hospital-Prices.jpg" width="555" height="407" class="align-right"><a id="figure7" name="figure7"></a>Health care and hospital prices are not driving recent overall inflation increases. The BLS has cited increases in the indices for gasoline, shelter and food as the largest contributors to the seasonally adjusted all items increase. The CPI-U increased 0.8% in February on a seasonally adjusted basis, whereas the medical care index rose 0.2% in February. The index for prescription drugs rose 0.3%, but the hospital index for hospital services declined 0.1%.<sup><a href="#fn33">33</a></sup></p> <p>This is consistent with pre-pandemic trends. Despite persistent cost pressures, hospital prices have seen consistently modest growth in recent years. According to BLS data, hospital prices have grown an average 2.1% per year over the last decade, about half the average annual increase in health insurance premiums. (<a href="#figure7">See Figure #7</a>) More recently, hospital prices have grown much more slowly than the overall rate of inflation. In the 12 months ending in February 2022, hospital prices increased 2.1%. In fact, even when excluding the artificially low rates paid to hospitals by Medicare and Medicaid, average annual price growth has still been below 3% in recent years.<sup><a href="#fn34">34</a></sup></p> <h2>Conclusion</h2> <p>While we hope that our nation is rounding the corner in the battle against COVID-19, it is clear that the pandemic is not over. During the week of April 11, there have been an average of over 33,000 cases per day<sup><a href="#fn35">35</a></sup> and reports suggest that a new subvariant of the virus (Omicron BA.2) is now the dominant strain in the U.S.<sup><a href="#fn36">36</a></sup> As a result, the challenges hospitals and health systems are currently facing are bound to last much longer.</p> <p>As COVID-19 infections and hospitalizations are decreasing in some parts of the U.S. and increasing in others, hospitals and health systems continue to care for COVID-19 and non-COVID-19 patients. With additional surges potentially on the horizon, the massive growth in expenses is unsustainable. Most of the nation’s hospitals were operating on razor thin margins prior to the pandemic; and now, many of these hospitals are in an even more precarious financial situation. Regardless of potential new surges of COVID-19, hospitals and health systems continue to face workforce retention and recruitment challenges, supply chain disruptions and exorbitant expenses as outlined in this report.</p> <p>Hospitals appreciate the support and resources that Congress has provided throughout the pandemic; however, additional support is needed now to keep hospitals strong so they can continue to provide care to patients and communities.</p> <hr> <h2>Sources</h2> <ol> <li id="fn1"><a href="https://coronavirus.jhu.edu/map.html" target="_blank">https://coronavirus.jhu.edu/map.html</a></li> <li id="fn2"><a href="https://coronavirus.jhu.edu/map.html" target="_blank">https://coronavirus.jhu.edu/map.html</a></li> <li id="fn3"><a href="https://covid.cdc.gov/covid-data-tracker/#new-hospital-admissions" target="_blank">https://covid.cdc.gov/covid-data-tracker/#new-hospital-admissions</a></li> <li id="fn4"><a href="https://www.kaufmanhall.com/insights/research-report/national-hospital-flash-report-january-2022" target="_blank">https://www.kaufmanhall.com/insights/research-report/national-hospital-flash-report-january-2022</a></li> <li id="fn5"><a href="https://premierinc.com/newsroom/blog/pinc-ai-data-cms-data-underestimates-hospital-labor-spending" target="_blank">https://premierinc.com/newsroom/blog/pinc-ai-data-cms-data-underestimates-hospital-labor-spending</a></li> <li id="fn6"><a href="https://www.ipsos.com/en-us/news-polls/usa-today-ipsos-healthcare-workers-covid19-poll-022222" target="_blank">https://www.ipsos.com/en-us/news-polls/usa-today-ipsos-healthcare-workers-covid19-poll-022222</a></li> <li id="fn7"><a href="https://data.bls.gov/timeseries/ces6562200001?amp%253bdata_tool=xgtable&output_view=data&include_ graphs=true" target="_blank">https://data.bls.gov/timeseries/ces6562200001?amp%253bdata_tool=xgtable&output_view=data&include_ graphs=true</a></li> <li id="fn8"><a href="https://healthdata.gov/hospital/covid-19-reported-patient-impact-and-hospital-capa/g62h-syeh" target="_blank">https://healthdata.gov/hospital/covid-19-reported-patient-impact-and-hospital-capa/g62h-syeh</a></li> <li id="fn9"><a href="https://www.amnhealthcare.com/siteassets/amn-insights/surveys/amn-survey-of-temporary-allied-healthcareprofessional-staff-trends-2021.pdf" target="_blank">https://www.amnhealthcare.com/siteassets/amn-insights/surveys/amn-survey-of-temporary-allied-healthcareprofessional-staff-trends-2021.pdf</a></li> <li id="fn10"><a href="https://www.axios.com/amn-healthcare-pandemic-travel-nurses-profit-revenue-ebb5bcfd-4ca9-4263-a091-fb87bbb8d105.html" target="_blank">https://www.axios.com/amn-healthcare-pandemic-travel-nurses-profit-revenue-ebb5bcfd-4ca9-4263-a091-fb87bbb8d105.html</a></li> <li id="fn11"><a href="https://www.healthcaredive.com/news/hospital-lobbies-congress-ftc-travel-nurse-rate-caps-covid/618194/" target="_blank">https://www.healthcaredive.com/news/hospital-lobbies-congress-ftc-travel-nurse-rate-caps-covid/618194/</a></li> <li id="fn12"><a href="https://www.kaufmanhall.com/sites/default/files/2022-02/nationalhospitalflashreport_feb2022.pdf" target="_blank">https://www.kaufmanhall.com/sites/default/files/2022-02/nationalhospitalflashreport_feb2022.pdf</a></li> <li id="fn13"><a href="https://www.njha.com/pressroom/2022-press-releases/feb-25-2022-hospitals-confront-rising-staff-vacancy-ratesand-employment-costs-as-covid-sparks-unprecedented-workforce-challenges/" target="_blank">https://www.njha.com/pressroom/2022-press-releases/feb-25-2022-hospitals-confront-rising-staff-vacancy-ratesand-employment-costs-as-covid-sparks-unprecedented-workforce-challenges/</a></li> <li id="fn14"><a href="https://pubmed.ncbi.nlm.nih.gov/35385103/" target="_blank">https://pubmed.ncbi.nlm.nih.gov/35385103/</a></li> <li id="fn15"><a href="https://pubmed.ncbi.nlm.nih.gov/33880494/" target="_blank">https://pubmed.ncbi.nlm.nih.gov/33880494/</a></li> <li id="fn16"><a href="https://www.goodrx.com/healthcare-access/drug-cost-and-savings/january-drug-price-hikes-2022" target="_blank">https://www.goodrx.com/healthcare-access/drug-cost-and-savings/january-drug-price-hikes-2022</a></li> <li id="fn17"><a href="/system/files/2019-01/aha-drug-pricing-study-report-01152019.pdf" target="_blank">/system/files/2019-01/aha-drug-pricing-study-report-01152019.pdf</a></li> <li id="fn18"><a href="https://www.goodrx.com/healthcare-access/drug-cost-and-savings/january-2021-drug-increases-recap" target="_blank">https://www.goodrx.com/healthcare-access/drug-cost-and-savings/january-2021-drug-increases-recap</a></li> <li id="fn19"><a href="https://www.kff.org/medicare/issue-brief/prices-increased-faster-than-inflation-for-half-of-all-drugs-covered-bymedicare-in-2020/" target="_blank">https://www.kff.org/medicare/issue-brief/prices-increased-faster-than-inflation-for-half-of-all-drugs-covered-bymedicare-in-2020/</a></li> <li id="fn20"><a href="https://www.kff.org/medicare/issue-brief/prices-increased-faster-than-inflation-for-half-of-all-drugs-covered-bymedicare- in-2020/" target="_blank">https://www.kff.org/medicare/issue-brief/prices-increased-faster-than-inflation-for-half-of-all-drugs-covered-bymedicare- in-2020/</a></li> <li id="fn21"><a href="https://icer.org/wp-content/uploads/2021/04/icer_upi_2021_assessment_031522.pdf" target="_blank">https://icer.org/wp-content/uploads/2021/04/icer_upi_2021_assessment_031522.pdf</a></li> <li id="fn22"><a href="https://www.kaufmanhall.com/insights/research-report/national-hospital-flash-report-january-2022" target="_blank">https://www.kaufmanhall.com/insights/research-report/national-hospital-flash-report-january-2022</a></li> <li id="fn23"><a href="https://www.vizientinc.com/-/media/documents/sitecorepublishingdocuments/public/pmo322_ pharmacymarketoutlook_highlights?sc_camp=a51548e6b3f14b729860854df5b33d2e" target="_blank">https://www.vizientinc.com/-/media/documents/sitecorepublishingdocuments/public/pmo322_ pharmacymarketoutlook_highlights?sc_camp=a51548e6b3f14b729860854df5b33d2e</a></li> <li id="fn24"><a href="https://www.reuters.com/business/healthcare-pharmaceuticals/gilead-covid-drug-takes-top-spot-us-hospitalspending-report-2022-02-01/" target="_blank">https://www.reuters.com/business/healthcare-pharmaceuticals/gilead-covid-drug-takes-top-spot-us-hospitalspending-report-2022-02-01/</a></li> <li id="fn25"><a href="https://www.340bhealth.org/files/contract_pharmacy_survey_findings_january_2022_final.pdf" target="_blank">https://www.340bhealth.org/files/contract_pharmacy_survey_findings_january_2022_final.pdf</a></li> <li id="fn26"><a href="https://premierinc.com/newsroom/blog/report-the-current-state-of-healthcare-supply-chain-disruptions" target="_blank">https://premierinc.com/newsroom/blog/report-the-current-state-of-healthcare-supply-chain-disruptions</a></li> <li id="fn27"><a href="http://www.fccoop.org/?p=10720" target="_blank">http://www.fccoop.org/?p=10720</a></li> <li id="fn28"><a href="https://premierinc.com/newsroom/blog/report-the-current-state-of-healthcare-supply-chain-disruptions" target="_blank">https://premierinc.com/newsroom/blog/report-the-current-state-of-healthcare-supply-chain-disruptions</a></li> <li id="fn29"><a href="https://www.hida.org/distribution/news/press-releases/2022/transportation-delays-persist-healthcare-supplychain.aspx" target="_blank">https://www.hida.org/distribution/news/press-releases/2022/transportation-delays-persist-healthcare-supplychain.aspx</a></li> <li id="fn30"><a href="https://www.kaufmanhall.com/insights/research-report/national-hospital-flash-report-january-2022" target="_blank">https://www.kaufmanhall.com/insights/research-report/national-hospital-flash-report-january-2022</a></li> <li id="fn31"><a href="https://www.bls.gov/news.release/cpi.nr0.htm" target="_blank">https://www.bls.gov/news.release/cpi.nr0.htm</a></li> <li id="fn32"><a href="https://www.wsj.com/articles/us-inflation-consumer-price-index-march-2022-11649725215" target="_blank">https://www.wsj.com/articles/us-inflation-consumer-price-index-march-2022-11649725215</a></li> <li id="fn33"><a href="https://www.bls.gov/news.release/cpi.nr0.htm" target="_blank">https://www.bls.gov/news.release/cpi.nr0.htm</a></li> <li id="fn34">hospital prices: <a href="https://www.bls.gov/ppi/" target="_blank">bureau of labor statistics</a>, annual average ppi industry data for <a href="https://www.bls.gov/iag/tgs/iag622.htm" target="_blank">general medical and surgical hospitals</a> by patient type-private insurance patients, not seasonally adjusted, series id: <a href="https://fred.stlouisfed.org/series/PCU62211A62211A6" target="_blank">pcu62211a62211a</a></li> <li id="fn35"><a href="https://coronavirus.jhu.edu/map.html" target="_blank">https://coronavirus.jhu.edu/map.html</a></li> <li id="fn36"><a href="https://www.nytimes.com/2022/03/29/health/ba2-variant-covid-cases.html" target="_blank">https://www.nytimes.com/2022/03/29/health/ba2-variant-covid-cases.html</a></li> </ol> </div> <div class="col-md-4"> <p><a href="/system/files/media/file/2022/04/2022-Hospital-Expenses-Increase-Report-Final-Final.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."><img alt="Massive Growth in Expenses and Rising Inflation Fuel Continued Financial Challenges for America’s Hospitals and Health Systems page 1." data-entity-type="file" data-entity-uuid="7e202b18-c1ac-41fb-91be-f2d3f709a937" src="/sites/default/files/inline-images/Page-1-2022-Hospital-Expenses-Increase-Report-Final-Final.png" width="1700" height="2200"></a></p> <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> Thu, 20 Apr 2023 04:00:00 -0500 COVID-19: Supplies and Personal Protective Equipment (PPE) /news/headline/2023-04-12-fda-dont-use-certain-n95-respirators-and-masks-made-om-halyard <p>Health care providers and consumers should not use certain N95 respirators made by O&M Halyard because they do not meet quality and performance expectations, and should not use certain surgical masks and pediatric face masks made by the company for fluid barrier protection, the Food and Drug Administration <a href="https://www.fda.gov/medical-devices/safety-communications/risk-protection-failure-certain-om-halyard-surgical-n95-respirators-surgical-masks-and-pediatric">announced</a> today. FDA continues to evaluate the models, and advised customers to watch for future updates or recommendations. O&M Halyard recently told customers it is working to increase the supply of alternative products but expects some face mask shortages into May. <br />  </p> Wed, 12 Apr 2023 14:30:37 -0500 COVID-19: Supplies and Personal Protective Equipment (PPE) /news/headline/2023-03-17-hhs-fda-covid-19-emergency-use-authorizations-remain-effect <p>Health and Human Services Secretary Xavier Becerra this week <a href="https://public-inspection.federalregister.gov/2023-05609.pdf" target="_blank">amended</a> the February 2020 COVID-19 emergency use authorization declaration so that the Food and Drug Administration’s emergency use authorizations for COVID-19 diagnostics, personal protective equipment, other medical devices, and drug and biological products will remain in effect until there is no longer a “significant potential” for a COVID-19 public health emergency or the authorized devices or products have been approved. For more information, see the FDA’s <a href="https://www.fda.gov/emergency-preparedness-and-response/mcm-legal-regulatory-and-policy-framework/faqs-what-happens-euas-when-public-health-emergency-ends#questions" target="_blank">EUA questions and answers</a>.</p> Fri, 17 Mar 2023 15:29:53 -0500 COVID-19: Supplies and Personal Protective Equipment (PPE) <div class="container"> <div class="row"> <div class="col-md-8"> <h2>Mandated Staffing Talking Points</h2> <h3>Patient safety is always the number one priority. Nurses need to be empowered with flexibility to determine appropriate staffing for the needs of their patients.</h3> <ul> <li>Hospitals and health systems are <strong>committed to safe nurse staffing</strong> to ensure quality care and optimal patient experience.</li> <li><strong>One size doesn’t fit all</strong> when it comes to safe staffing. The number of patients for whom a nurse can provide safe, competent and quality care is dependent upon multiple factors. <ul> <li>Patients in need of care in the unit;</li> <li>Type and degree of illness;</li> <li>The overall care team including caregivers who may not be nurses;</li> <li>Physical layout of the unit.</li> </ul> </li> <li><strong>We want to empower nurses</strong> so they can best tailor clinical care for the patient.</li> <li>Nurses, not legislators, should determine patient care. Mandatory nurse ratios do not allow for innovation and new team-based care models that we saw emerge during the pandemic.</li> </ul> <h2>Flexibility</h2> <ul> <li><strong>We agree that safe staffing is a critical component of good care.</strong> Mandated nurse staffing ratios remove needed flexibility from nurses for the care they provide.</li> <li><strong>Mandated nurse staffing ratios are a static and ineffective tool</strong> that cannot guarantee a safe health care environment or quality level to achieve optimal patient outcomes.</li> <li><strong>Care needs can change instantly.</strong> Nurses at the unit level need flexibility to adapt to the changing patient needs throughout the day.</li> <li><strong>Static ratios do not recognize</strong> the times when a nurse can safely care for a patient in times of <strong>low intensity like discharge.</strong></li> <li>Increasing the number of <strong>nurses on a shift does not necessarily translate to higher quality care.</strong> <ul> <li>Care is provided as a team with each member playing a key role based on their expertise and skills.</li> <li>Lack of flexibility and mandated ratios will lead to nurses handling aspects that take them away from bedside care such as housekeeping or transport, among other duties.</li> </ul> </li> </ul> <h2>Care Team</h2> <ul> <li><strong>Mandated approaches to nurse staffing require outdated care models</strong> that do not incorporate newer technologies or the interprofessional team-care model. What matters most for good care is the experience of the nurses in the unit, the composition of the care team and the needs of the patients.</li> <li><strong>In the interprofessional team-care model</strong>, the nurse, respiratory therapist, and case manager work together to ensure quality and optimal patient outcomes.</li> <li>Mandated approaches to nurse staffing <strong>limit innovation</strong> and increase stress on a health care system already facing an escalating shortage of nurses.</li> <li>Patient safety is the top priority for everyone in health care.</li> </ul> <h2>Workplace violence</h2> <h3>Our health care workers' crucial life-saving roles have never been more evident, which is why their safety, protection and well-being, remain our top priority.</h3> <ul> <li><strong>Hospitals and health care systems have long had robust protocols in place</strong> to detect and deter violence against their staff. Since the onset of the pandemic, however, violence against hospital employees has increased — and there is no sign it is receding.</li> <li>To support hospitals' efforts, <strong>the AHA created the Hospitals Against Violence member advisory group</strong>, and we have worked to address violence in hospitals and health systems and in the communities we serve. We have developed tools and resources to highlight and share with the field numerous programs and resources to combat violence.</li> <li><strong>The AHA has urged the U.S. Attorney General to support legislation that would increase protections for health care workers from assault and intimidation.</strong> While we may never reduce violence in our hospitals to zero – because we are there to serve in the most challenging settings and circumstances – we can insist on zero tolerance for abusive behavior.</li> <li>People who dedicate themselves to saving lives deserve a safe environment, free of violence and intimidation.</li> <li>Last year, we developed a focused <a href="/system/files/media/file/2021/10/building-a-safe-workplace-and-community-framework-for-hospitals-and-health-systems.pdf">framework</a> for hospital, health system and security leaders. We also collaborated with the International Association for Healthcare Security and Safety to create <a href="/system/files/media/file/2021/10/creating-safer-workplaces-guide-to-mitigating-violence-in-health-care-settings-f.pdf">a guide for hospital and health system leaders</a>.</li> <li>The AHA/IAHSS guide focuses on employee well-being, promotes data-driven approaches, embeds safety and security into existing workflows and electronic medical records, and helps facilities develop relationships to improve security. It also includes <a href="/system/files/media/file/2021/10/building-a-safe-workplace-and-community-framework-for-hospitals-and-health-systems.pdf">a framework for building safer workplaces</a>, actionable steps for mitigating violence in hospitals and health care settings, and links to resources including webinars and podcasts.</li> </ul> <h2>OSHA Emergency Temporary Standard</h2> <ul> <li>The health and safety of all health care workers remains a top priority for the AHA and our members.</li> <li>We are committed to following the science-based and quickly evolving guidance issued by the Centers for Disease Control and Prevention (CDC). Throughout the course of the pandemic, hospitals have followed these protocols to ensure the safety of front-line staff and patients.</li> <li>Hospitals and health systems already have protocols in place to protect their workforce.</li> <li>While we acknowledge and appreciate OSHA’s consideration of additional flexibility for employers and other potential changes to the ETS, hospitals diligent efforts have helped protect health care workers by ensuring that the latest evidence-based practices and policies are followed.</li> <li>With CDC guidance and recommendations, CMS’ vaccination requirement and strictly enforced OSHA general standards, we strongly believe that an inconsistent OSHA COVID-19 health care standard is not necessary, would cause confusion and will ultimately lower hospital employees’ morale and worsen unprecedented personnel shortages in hospitals.</li> <li>It is essential to a well-functioning health care system that only one set of science-based standards be applied to health care providers, and that these standards be aligned across federal agencies.</li> <li>CMS already enforces CDC infection prevention and control guidelines as well as its vaccination mandate via the Medicare Conditions of Participation. Together with this, OSHA has sufficient authority through its existing general standards to protect health care employees from the hazard of COVID-19, not to mention other hazards.</li> </ul> <h2>Protecting Workers</h2> <ul> <li>Maintaining front-line workers’ health and safety is central to a successful response to the pandemic, and no one has more of a stake in doing so than the nation’s hospitals.</li> <li>Through the efforts of their organizational leadership, infection control officers, hospital engineers and material managers, and other front-line staff, they have done everything in their power to ensure that health care workers and patients are protected and that the latest evidence-based practices and policies are followed.</li> <li>Even in the midst of incredible challenges, like unprecedented surges of patients, severe shortages of PPE and other critical supplies, these dedicated experts scrambled to do all they could to support patients and staff alike, seeking supplies of PPE and other necessary supplies when severe shortages were hitting the US. They showed dedication and ingenuity in the face of a sometimes overwhelming situation.</li> <li>And this is precisely why it is essential to a well-functioning health care system that only one set of science-based standards be applied to health care providers, and that these standards be aligned across federal agencies. Enforcement of unaligned rules would not help and could actually cause harm by focusing compliance efforts on contradictory or unnecessary tings.</li> </ul> <h2>Workers Infected on the Job</h2> <ul> <li>It is tragic that so many have died during COVID. What we have learned from talking to hospitals to understand how workers became infected is that the most common infections took place outside of the hospital setting.</li> <li>What you may not be aware of is a JAMA study that looked at this issue and found that health care workers were more likely to catch COVID-19 in the community than from the workplace.</li> </ul> <h2>Supply Chain Issues</h2> <ul> <li>From the beginning, the AHA worked with the federal agencies to sound the alarm to strengthen our current supply chain and we are actively engaged with all stakeholders to find solutions.</li> <li>This was a once in a lifetime pandemic that began in China and no one could have anticipated that the supply chain would shut down. Everyone has been affected by supply chain issues and hospitals are no different.</li> <li>Hospitals have served as a catalyst by launching innovative initiatives with the private sector, like the 100 Million Mask Challenge.</li> <li>We pushed all levers to increase supplies of PPE so that front line caregivers were protected to the best of our ability. This included calling on the Administration to fully implement the Defense Production Act, urging Congress to provide more resources to acquire PPE.</li> <li>We agree that strengthening the supply chain, including scaling up the capabilities for the stockpiling and rapid distribution of PPE must be a high priority of the federal and state governments going forward.</li> <li>We also support efforts to incentivize and strengthen the domestic production of essential medical products, such as PPE.</li> </ul> </div> <div class="col-md-4"> <p><a href="/system/files/media/file/2022/03/Workforce-messages-3-23-22.pdf" title="Click here to download the Workforce Messages PDF."><img alt="Page 1 of Workforce Messages." data-entity-type="file" data-entity-uuid="d6978a26-9a7d-4181-8f69-25597309df42" src="/sites/default/files/inline-images/Page-1-Workforce-Messages-May-2-2022.png" width="1700" height="2200"></a></p> <div class="external-link spacer"><a class="btn btn-wide btn-primary" href="/system/files/media/file/2022/03/Workforce-messages-3-23-22.pdf" target="_blank" title="Click here to download the Workforce Messages PDF.">Download the PDF</a></div> </div> </div> </div> Mon, 02 May 2022 08:00:00 -0500 COVID-19: Supplies and Personal Protective Equipment (PPE) /guidesreports/2022-04-22-massive-growth-expenses-and-rising-inflation-fuel-continued-financial <div class="container"> <div class="row"> <div class="col-md-8"> <p>For over two years since the outset of the COVID-19 pandemic, America’s hospitals and health systems have been on the front lines caring for patients and protecting communities. With over 80 million cases, nearly 1 million deaths, and over 4.6 million hospitalizations, the pandemic has taken a significant toll on hospitals and health systems and placed enormous strain on the nation’s health care workforce.</p> <p>Hospitals and health systems have repeatedly confronted a range of financial and operational challenges, including historic volume and revenue losses, as well as skyrocketing expenses. When coupled with rising inflation and growth in input prices, these expense increases have been severely detrimental to hospital finances, leading to billions in losses and over 33% of hospitals operating on negative margins.</p> <p><img alt="Figure #1: Increase in Hospital Expenses Per Patient from 2019 to 2021. Drug: 36.9%. Labor: 19.1%. Supply: 20.6%. Total: 20.1%. Source: January 2022 Kaufman Hall National Hospital Flash Report." data-entity-type="file" data-entity-uuid="650de08c-92ad-4b43-a4de-5626955ff31a" src="/sites/default/files/inline-images/Figure-1-Increase-in-Hospital-Expenses-Per-Patient-2019-2021.jpg" width="457" height="392" class="align-right"><a id="figure1" name="figure1"></a>A new AHA report highlights the significant growth in expenses across labor, drugs, and supplies (<a href="#figure1">see chart</a>), as well as the impact that rising inflation is having on hospital prices. <a href="/costsofcaring"><strong>View the full report.</strong></a> Other data highlights are below.</p> <ul> <li>According to data from the Bureau of Labor Statistics, hospital employment is down approximately 100,000 from pre-pandemic levels. At the same time, hospital labor expenses per patient through 2021 were 19.1% higher than pre-pandemic levels in 2019. Labor costs account for more than 50% of hospitals’ total expenses. Therefore, even a slight increase in these costs can have significant impacts on a hospital’s total expenses and operating margins.</li> <li>Driving the growth in labor expenses has been an increased reliance on contract staff, especially contract nurses, who are integral members of the clinical team. In 2019, hospitals spent a median of 4.7% of their total nurse labor expenses for contract travel nurses, which skyrocketed to a median of 38.6% in January 2022.</li> <li>Contract staff agencies have increased the rates they bill hospitals significantly. In fact, hourly billing rates that hospitals pay staffing firms for contract employees increased 213% compared to pre-pandemic levels and led to a 62% profit margin for contract staff agencies, i.e., the difference between what the firms charge hospitals and what the firms actually pay the contract employees.</li> <li>Drug expenses also increased dramatically, 36.9% on per patient bases, compared to pre-pandemic levels. As a share of non-labor expenses, drug expenses grew from approximately 8.2% in January 2019 to 10.6% in January 2022.</li> <li>Medical supply expenses grew 20.6% through the end of 2021, compared to pre-pandemic levels. When focusing on hospital departments most directly involved in care for COVID-19 patients − ICUs and respiratory care departments − medical supply expenses increased 31.5% and 22.3%, respectively, from pre-pandemic levels.</li> <li>Higher economy-wide costs have important effects on hospital and health system prices. In April 2021, BLS reported that the CPI-U had the largest 12-month increase since September 2008 and consumer prices rose by a historic 8.5% in March 2022. Despite persistent cost pressures, hospital prices have seen consistently modest growth in recent years. According to BLS data, hospital prices have grown an average 2.1% per year over the last decade, about half the average annual increase in health insurance premiums.</li> </ul> <h2>Additional Federal Support Needed</h2> <p>With additional surges potentially on the horizon and case rates rising once again, the massive growth in expenses is unsustainable. Most of the nation’s hospitals and health systems were operating on razor-thin margins prior to the pandemic; and now, many of these hospitals are in an even more precarious financial situation. Hospitals appreciate the support and resources that Congress has provided throughout the pandemic; however, additional support is needed now so hospitals can provide care to the patients and communities they serve.</p> </div> <div class="col-md-4"> <div class="external-link spacer"><a class="btn btn-wide btn-primary" href="/costsofcaring" target="_blank" title="Click here to read the full Massive Growth in Expenses and Rising Inflation Fuel Continued Financial Challenges for America’s Hospitals and Health Systems report PDF.">Read the Full Report</a></div> <div class="external-link spacer"><a class="btn btn-wide btn-primary" href="/system/files/media/file/2022/04/2022-Hospital-Expenses-Increase-Report-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 class="external-link spacer"><a class="btn btn-wide btn-primary" href="/2020-10-07-get-involved" target="_blank" title="Click here to Urge Congress to Reverse Medicare Cuts and Provide Additional COVID-19 Relief to Hospitals.">Urge Congress to Take Action to Support Hospitals</a></div> <hr> <h4><a href="/advancing-health-podcast/2022-04-25-surging-input-costs-create-many-challenges-hospitals-and-health">Listen to the Surging Input Costs Create Many Challenges for Hospitals and Health Systems Podcast</a></h4> <div><a href="https://soundcloud.com/advancinghealth" target="_blank" title="Advancing Health">Advancing Health</a> · <a href="https://soundcloud.com/advancinghealth/surging-input-costs-create-many-challenges-for-hospitals-and-health-systems" target="_blank" title="Surging Input Costs Create Many Challenges for Hospitals and Health Systems">Surging Input Costs Create Many Challenges for Hospitals and Health Systems</a></div> </div> </div> </div> Sun, 24 Apr 2022 17:00:00 -0500 COVID-19: Supplies and Personal Protective Equipment (PPE)