Report: Hospitals Face Labor Shortages, Supply Chain Challenges

February 07, 2022

To close out 2021, U.S. hospitals were in a “vise of rising volumes and ballooning expenses,” while facing continued labor shortages and supply chain challenges, according to the latest Kaufman Hall National Hospital Flash Report.

The report, released last week, indicated that hospitals ended 2021 in a better position than a year prior, but still lagged behind their pre-pandemic performance.

"As we enter the third year of the pandemic, hospital and health system leaders face worsening labor shortages that are driving up costs across health care,” Erik Swanson, senior vice president of data and analytics with Kaufman Hall, said in a statement.

Here are five key takeaways from the report:

• Margins:  Federal support for hospitals was critical to offset losses due to COVID-19. Compared to pre-pandemic levels, the median change in operating margin was down 14.7 percent without federal Coronavirus Aid, Relief, and Economic Security Act (CARES) funding
• Improvements from 2020:  The median Kaufman Hall Operating Margin Index was 2.5 percent for 2021, compared to -0.9 percent for 2020, not including CARES funding
• Omicron’s Impact:  Hospitals saw explosive growth in COVID-19 cases and hospitalizations during December, with the seven-day averages increasing 353.5 percent and 98.3 percent, respectively
• Expensive challenges:  Labor shortages and supply chain issues challenged hospitals to close out the year. Compared to pre-pandemic levels, total expense per adjusted discharge was up 20.1 percent; labor expense per adjusted discharge was up 19.1 percent; and non-labor expense per adjusted discharge was up 19.9 percent
• Quotable:  “Hospitals have yet to rebound to pre-pandemic levels of margins and volumes, while rising revenues have been offset by escalating expenses,” the report said

“Organizations are having to pay high salaries to attract the workforce they need, while also paying more for drugs and other supplies,” Swanson said. “Managing through these challenges will require organizations to build new levels of agility and efficiencies.”

HAP continues to advocate for resources and support to ensure Pennsylvania’s hospitals and their outstanding teams can provide high-quality care in the communities they serve.

Kaufman Hall’s monthly snapshot draws on data from more than 900 hospitals and is available online.