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Hospital labor expenses up 37% from pre-pandemic levels in March
Dive Brief:
- Hospitals’ labor costs rose by more than a third from pre-pandemic levels by March 2022, according to a report out Wednesday from Kaufman Hall.
- Heightened temporary and traveling labor costs were a main contributor, with contract labor accounting for 11% of hospitals’ total labor expenses in 2022 compared to 2% in 2019, the report found.
- Contract nurses’ median hourly wages rose 106% over the period, from $64 an hour to $132 an hour, while employed nurse wages increased 11%, from $35 an hour to $39 an hour, the report found.
Dive Insight:
The new data from Kaufman Hall supports concerns hospital executives expressed while releasing first quarter earnings results, as higher-than expected labor costs spurred some operators, like HCA, to lower their financial full-year guidance.
The ongoing use of contract labor amid shortages driven by heightened turnover was a key factor executives cited for higher costs, and follows the findings from Kaufman Hall’s latest report.
More than a third of nurses surveyed by staffing firm Incredible Health said they plan to leave their current jobs by the end of this year, according to a March report. While burnout is driving them to leave, higher salaries are the top motivating factor for taking other positions, that report found.
Kaufman Hall’s report, which analyzes data from more than 900 hospitals across the country, found hospitals spent $5,494 in labor expenses per adjusted discharge in March compared to $4,009 roughly three years ago.
Costs rose for hospitals in every region, though the South and West experienced the largest increases from pre-pandemic levels as those expenses rose 43% and 42%, respectively.
The West and Northeast/Mid-Atlantic regions saw the highest expenses consistently from 2019 to 2022, according to the report.
“The pandemic made longstanding labor challenges in the healthcare sector much worse, making it far more expensive to care for hospitalized patients over the past two years,” said Erik Swanson, senior vice president of data and analytics at Kaufman Hall.
“Hospitals now face a number of pressures to attract and retain affordable clinical staff, maintain patient safety, deliver quality services and increase their efficiency,” Swanson said.
The report also notes that hospitals are competing with non-hospital employers also pursuing hourly staff, though those companies can pass along wage increases to consumers through higher prices “in a way healthcare organizations cannot,” the report said.
Some hospitals, like HCA Healthcare and Universal Health Services, are looking to raise prices for health plans amid rising nurse salaries, according to reporting from The Wall Street Journal.
Another recent report from group purchasing organization Premier found the CMS underestimated hospital labor spending when making payment adjustments for the 2022 fiscal year, resulting in hospitals receiving only a 2.4% rate increase compared to a 6.5% increase in hospital labor rates.
To match the rates hospitals are now paying staff, an adequate inpatient payment update for fiscal 2023 is needed, that report said.
The CMS proposed its IPPS rule for FY 2023 on April 18 that includes a 3.2% hike to inpatient hospital payments, which provider groups like the American Hospital Association rebuked as “simply unacceptable” considering inflation and rising hospital labor costs.
Businesses face major benefits questions amid Roe uncertainty
Corporate America is facing a flurry of questions about how it provides health benefits in the wake of a leaked U.S. Supreme Court draft that indicates the federal right to abortion could be overturned.
Why it matters: Businesses hoping to use reproductive health benefits as part of efforts to recruit and retain employees would have to be careful not to run afoul of laws should states be allowed to ban abortions.
- The balancing act over the next several months could get messy, experts warn.
What they’re saying: “It’s a serious issue for employers,” said Candice Sherman, the CEO of the Northeast Business Group on Health. The group represents roughly 80 large companies such as American Express, Colgate, Moderna and Pfizer.
- Limits on abortion coverage have the potential to impact the physical and mental health of the workforce and could come as many employers are addressing equity and inclusion for women, people of color and LGBTQ employees, Sherman said.
- That is often communicated by companies through benefit design.
State of play: Some large companies like Amazon, Apple and Lyft have already announced plans to provide workarounds in those states with abortion restrictions.
- But many others are still on the sidelines as they tease out employees’ priorities on abortion-related benefits, as well as the potential costs and legal risks.
- Eleven states restrict insurance coverage of abortion in all private insurance plans written in the state, including those offered through Affordable Care Act markets, according to the Guttmacher Institute. Six other states require abortion coverage in private health insurance plans.
Zoom in: One of the most immediate questions is what kind of employer-sponsored abortion coverage — as well as enhanced benefits like travel stipends — might create legal liabilities for companies in states that ban abortion.
- “There’s a question as to whether providing transportation benefits could be construed, or at least alleged by the states in enforcement, as aiding and abetting,” said Garrett Hohimer, director of policy and advocacy for the Business Group on Health. That group counts corporations like The Walt Disney Co., Walmart and General Motors among its members.
- Companies like Citigroup that pay for out-of-state abortions have already been threatened with the loss of business.
Yes, but: In the case of a challenge, companies would have a strong argument that federal protections for providing abortion care benefits preempt state laws, Emily Dickens, the head of government affairs for the Society for Human Resource Management, told Axios.
- Dickens pointed specifically to the Pregnancy Discrimination Act which specifically says an employer is permitted to provide health insurance coverage for abortion, as well as protections under ERISA law.
But, but, but: It’s not a sure thing. For instance: “ERISA is not a get out of jail free card,” Hohimer warned, saying there is some question about how the law would be interpreted.
- While experts largely believe the Affordable Care Act would provide protections for birth control coverage, it’s unclear how fertility benefits such as egg freezing, surrogacy or in vitro fertilization might be affected, Sherman said.
What to watch: Many large companies already offer health benefits allowing workers to travel to Centers of Excellence for procedures like joint replacements or cancer care.
- Those kinds of benefits will likely gain more attention because of the attention surrounding reproductive health, Hohimer said.
- Sherman said this may also raise questions about whether there’s flexibility in the tax code to expand the scope of Flexible Spending Accounts or Health Savings Accounts to cover travel for any health care issues.
The bottom line: “Assuming this discussion comes down the way we think it may, organizations are going to have to work very hard,” Sherman said.
COVID-19 hospitalizations up in 39 states
COVID-19 hospitalizations are up 20 percent nationwide over the last 14 days, with 39 states and Washington, D.C., reporting an increase.
Nationwide, COVID-19 cases increased 58 percent over the past 14 days, according to HHS data collected by The New York Times. Reported case counts may be directionally helpful at this point of the pandemic, given the use of rapid, at-home COVID-19 tests that result in under-counting.
“I think that we’re dramatically undercounting cases,” former FDA commissioner Scott Gottlieb, MD, told CBS News April 11. “We’re probably only picking up one in seven or one in eight infections.”
Hospitalizations are up 20 percent nationwide over the last 14 days, with a daily average of 19,694 people hospitalized with COVID-19 as of May 12. The CDC is keeping a close eye on the acuity of hospitalizations, with Director Rochelle Walensky, MD, noting that the agency is seeing less oxygen use, fewer ICU stays and no increase in associated death compared with earlier periods of the pandemic.
Here are the 14-day changes for hospitalizations in each state and Washington, D.C., reporting an increase, along with their daily average hospitalizations:
Hawaii: 64 percent (92 hospitalizations)
Maine: 61 percent (222)
Montana: 58 percent (25)
Massachusetts: 55 percent (703)
Pennsylvania: 47 percent (1,104)
Alaska: 45 percent (38)
Connecticut: 42 percent (337)
Michigan: 42 percent (812)
Rhode Island: 40 percent (87)
Wisconsin: 39 percent (314)
Delaware: 37 percent (188)
Iowa: 36 percent (113)
New Hampshire: 35 percent (112)
New York: 31 percent (2,627)
Virginia: 31 percent (383)
Minnesota: 28 percent (404)
Florida: 28 percent (1,380)
New Jersey: 27 percent (707)
Maryland: 25 percent (458)
West Virginia: 24 percent (120)
Illinois: 23 percent (815)
Nevada: 23 percent (161)
Ohio: 22 percent (734)
Oregon: 20 percent (284)
Kentucky: 19 percent (249)
Washington, D.C.: 19 percent (84)
Colorado: 18 percent (170)
Vermont: 17 percent (64)
Indiana: 15 percent (297)
California: 14 percent (1,463)
South Carolina: 13 percent (127)
Louisiana: 11 percent (65)
Kansas: 7 percent (79)
Georgia: 5 percent (576)
North Carolina: 5 percent (877)
Utah: 4 percent (72)
Idaho: 4 percent (45)
Missouri: 3 percent (384)
Nebraska: 2 percent (76)
Arkansas: 2 percent (97)
The 14-day changes for cases in each state reporting an increase, along with their daily average cases, can be found through HHS data collected by The New York Times here. Seven-day changes for cases in each state can be found here.
The more contagious omicron subvariant BA.2 makes up 68.1 percent of new cases in the U.S., according to the latest estimates from the CDC. New Jersey has the highest proportion of BA.2 cases of all states, according to the latest ranking of states by the subvariant’s prevalence.
President Joe Biden signed into law March 15 a sweeping $1.5 trillion bill that funds the government through September. The legislation did not include COVID-19 funding the White House had requested from Congress because of partisan disagreement about offsetting the funding.
The current lack of funding is affecting resources for COVID-19 testing and treatment. The Health Resources and Services Administration stopped accepting providers’ claims for COVID-19 testing and treatment of the uninsured March 22 because of a lack of sufficient funds, and stopped accepting claims for the vaccination of uninsured people April 5. The federal government is also cutting back shipments of monoclonal antibody treatments to states by 30 percent, and the U.S. supply of those treatments could run out as soon as May.
US may see ‘pretty sizable’ fall COVID-19 surge, Dr. Ashish Jha warns
The U.S. may see a “pretty sizable wave” of COVID-19 infections this fall and winter as the virus continues to evolve and immunity wanes, White House Covid-19 Response Coordinator Ashish Jha, MD, said May 8 on ABC News‘ “This Week.”
Federal health officials are looking at a range of disease forecasting models, which suggest the U.S. could experience a large surge in late 2022, similar to the last two winters, according to Dr. Jha. On May 6, the White House projected 100 million COVID-19 infections could occur this fall and winter, according to The Washington Post.
“If we don’t get ahead of this thing … we may see a pretty sizable wave of infections, hospitalizations and deaths this fall and winter,” he said. “Whether that happens or not is largely up to us as a country. If we can prepare and if we can act, we can prevent that.”
More funding to purchase COVID-19 vaccines and therapeutics will be crucial to stave off a potential surge, according to Dr. Jha. The Biden administration is asking Congress for an additional $22.5 billion in emergency aid to support these efforts.
“If Congress does not do that now, we will go into this fall and winter with none of the capabilities that we have developed over the last two years,” Dr. Jha said.
Strike set to begin at Cedars-Sinai
Members of the Service Employees International Union-United Healthcare Workers West are set to begin a weeklong strike May 9 at Cedars-Sinai Medical Center in Los Angeles.
The union represents about 2,000 certified nursing assistants, surgical technicians, sterile processing technicians, transporters, environmental service workers, plant operation workers and food service technicians, according to NBC Los Angeles. Cedars-Sinai Medical Center has about 14,000 employees total.
Union members voted to authorize a strike in April. The union and hospital began negotiating a new labor contract March 21, according to NBC Los Angeles. A hospital spokesperson told the local news outlet that upon the start of negotiations, “Cedars-Sinai presented a strong economic proposal that would have continued our market leading pay by providing substantial pay increases to bargaining unit employees as early as March 27.”
The union contends that in its latest round of bargaining, Cedars-Sinai rejected proposals on PPE stockpiles, COVID-19 exposure notifications, keeping pregnant and immunocompromised workers away from COVID-19 patients and other safety measures. “We’re asking for basic workplace protections and respect for the lives and health of caregivers and patients,” an SEIU-UHW statement reads.
“We respect the rights of SEIU-UHW members to take this step,” the hospital said in a statement. “The most effective way to reach a fair agreement, however, is for both parties to stay at the bargaining table and finish negotiations.”
HENRY KOTULA 