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AHA Report: ‘Massive’ Expenses and Inflation Challenge U.S. Hospitals

Costs for workforce, medicine, supplies, equipment on the rise during COVID-19

April 25, 2022

Skyrocketing inflation and rising costs for workforce, medicine, supplies, and equipment are straining hospitals across the country, according to a report released today from the American Hospital Association (AHA).

The publication of the AHA report comes as the nation’s health care leaders have convened in Washington, D.C., for the AHA Annual Membership Meeting. More than two years into the pandemic, America’s hospitals are facing enormous financial pressure that’s testing their ability to deliver care in their communities, AHA President and CEO Rick Pollack said in a statement.

“While we have made great progress in the fight against the virus, this report shows that we are not out of the woods yet when it comes to addressing the need to repair and rebuild our hospitals,” Pollack said.

“The pandemic has clearly demonstrated that America cannot be strong without its hospitals and health systems being strong,” he said.

Among the highlights in the report:

  • Employment:  Hospital employment is down about 100,000 jobs from pre-pandemic levels, according to federal data, while labor expenses per patient have increased more than 19 percent through 2021.
  • Drug costs:  Compared to pre-pandemic levels, median hospital drug expenses were 28.2 percent higher (36.9% higher per patient).
  • Supply expenses:  During 2021, hospital supply expenses were up 15.9 percent. Medical supply expenses in ICUs and respiratory care departments increased 31.5 percent and 22.3 percent, respectively.
  • Inflation challenges:  The report notes that hospital prices have grown much more slowly than the overall rate of inflation. Still, economy-wide inflation is posing new challenges for health care when it comes to labor, supply chain, capital investment, and consumer demand.
  • Quotable:  Pollack said: “We continue to urge Congress to provide additional support to address these challenges, including by reversing harmful Medicare cuts, replenishing the Provider Relief Fund, granting flexibility on accelerated and advance Medicare repayments, and extending or making permanent critical waivers that have improved patient care.”

HAP applauds the AHA for its outstanding advocacy on behalf of the nation’s hospital community and joins in this critical effort to ensure hospitals have the necessary resources and support they need to care for the communities they serve.

The AHA report is available for review online. In addition, the AHA today released a podcast reflecting on the challenges facing U.S. hospitals, including perspectives from Philip E. Pandolph, FACHE, president and CEO of Meadville Medical Center.