5 Takeaways about Mounting Hospital Financial Challenges

April 21, 2023

The rising cost of care is placing extraordinary financial pressure on hospitals, according to a new report from the American Hospital Association (AHA).

Released this week, the AHA report highlights the challenges hospitals are facing, with expenses outpacing reimbursement for care.

“Rising costs for drugs, supplies, and labor coupled with sicker patients, longer hospital stays, and government reimbursement rates that do not come close to covering the costs of caring for patients have created a dire situation for hospitals and health systems,” AHA President and CEO Rick Pollack said in a statement.

Among the key figures in the AHA report:

• Rising expenses:  Hospitals’ overall expenses increased 17.5 percent between 2019 and 2022, with labor costs rising 20.8 percent in that time
• Contract labor costs:  Total contact labor expenses increased 258 percent during 2022 compared to 2019
• Per patient costs:  Hospital supply expenses per patient increased 18.5 percent from 2019 to 2022, outpacing inflation by almost 30 percent
• Drug prices:  The median price of a new drug exceeded $200,000, and drug expenses per patient increased nearly 20 percent from 2019 and 2022
• Administrative burden:  In a survey, 74 percent of nurses reported an increase in insurer-required administrative tasks for medical services during the past five years, and nearly nine in 10 reported that this insurer administrative burden negatively impacted patient clinical outcomes

“As the hospital field continues to maintain its commitment to care in the face of these multiple challenges, it is time for policymakers to demonstrate their commitment to protecting the health and wellbeing of patients and communities by ensuring America has strong hospitals and health systems," the report notes.

The full report and one-page overview are available to review online.