Pandemic-induced supply chain issues and labor shortages have resulted in hourly wage increases that have driven down hospital operating margins, as well as increased healthcare spending.
Margins fell 15% from October 2020, according to the November edition of Syntellis Performance Trends. Main cause is rising hourly wages in healthcare facilities facing labor shortages and tighter competition to fill positions as workers quit due to pandemic burnout and the desire to seek other career opportunities.
Demand was strongest among respiratory therapists, who saw their hourly rates rise 11.5% in October from October 2019. This was more than triple the 3.7% increase in hourly rates for physiotherapists. during the same period, the cause being attributed to the rising number of patients with short and long-term respiratory effects caused by COVID-19. In addition, the number of registered nurses in all departments saw increases from 8% to 8.7%.
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“Retaining and recruiting the best talent is more than paying higher salaries. Healthcare organizations need to focus on rewarding and recognizing top performers in meaningful ways, including creating a safe environment. Engaging the top performers to solve the problems we face today will have a long-term impact on reshaping the model of care for the future, ”said Tonia Breckenridge, Managing Director of Huron, a global consulting firm, in a press release.
The higher expenses are in part due to rising costs for medical supplies. Although steadily increasing since the start of the pandemic, the past few months have seen higher than normal intakes, particularly in respiratory care. Here, the expenditure on medical supplies per unit of service increased by almost 56% compared to October 2019. In contrast, the growth rate of inpatient volumes has declined in recent months. While patient days increased 11.4% year-on-year in September, in October they only increased 6% year-on-year compared to October 2020 and October 2019. Adjusted discharges were stable year-on-year .
Meanwhile, staff FTEs for 10,000 wRVUs were down 7.6% from 2020 levels, but were only down 1.4% from 2019. This indicates that factors other than Staffing levels contribute to the increase in physician spending.
Despite the overall decline in operating margins, gross operating revenue increased 9.3% in October 2021 compared to October 2020 and 7.6% compared to October 2019. Inpatient revenue increased by 10 , 2% year-on-year and 11.8% from 2019. Ambulatory patient revenues increased 8.6% and 5.8%, respectively.
But Steve Wasson, executive vice president and general manager of data and intelligence solutions at Syntellis, says these current trends are not sustainable for hospitals, healthcare systems and physician groups nationwide, due to news. variants and another potential increase. “These results and trends suggest that organizations are likely to experience expense issues, both labor and supplies over the next several months, which will put pressure on margins and profitability. limit organizations from other types of necessary investments, ”he told HCB News.
He adds that health officials should find creative ways to recruit employees without necessarily raising salaries, assess their sourcing relationships to cut unnecessary costs, and increase revenue to exceed growing expenses.
Despite the pressures to deal with high levels of declining severe COVID-19 cases, Kaufman Hall also reported a second consecutive month of declining margins in October, as increased labor spending weighed on companies. overall hospital performance, according to its national hospital flash report in November. He added that the emergence of the new Omicron variant and the increase in hospitalizations for COVID-19 in recent weeks add to these challenges and make the future impact on hospitals uncertain.
Syntellis analyzed data from over 1,000 hospitals and 135,000 doctors, over 10,000 practices and 139 specialty categories.