New AHA Report Highlights Massive Surge in Input Costs for Hospitals and Health Systems

Rising inflation and dramatic growth in expenses for workforce, drugs, medical supplies and equipment continue to strain America’s hospitals and health systems more than two years into the COVID-19 pandemic

WASHINGTON (April 25, 2022) — The American Hospital Association today released a new report that examines the tremendous growth in a variety of input costs for hospitals and health systems, including expenses for workforce, drugs, supplies and equipment, as well as the impact of skyrocketing economy-wide inflation. These surges in input costs, along with ongoing challenges from the COVID-19 pandemic and Medicare payment cuts, have continued to strain the resources the hospital field needs to care for their patients and communities.

“America’s hospitals and health systems, and our caregivers, have been on the front lines in fighting the pandemic for over two years now, facing numerous challenges along the way,” said AHA President and CEO Rick Pollack. “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. The dramatic rise in costs of labor, drugs, supplies and equipment continue to put enormous pressure on our ability to provide care to our patients and communities. The pandemic has clearly demonstrated that America cannot be strong without its hospitals and health systems being strong. 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.”

Among other data, highlights of the report include:

  • Hospital employment is down approximately 100,000 from pre-pandemic levels according to BLS data. At the same time, labor expenses per patient increased 19.1% through 2021 compared to 2019 levels. Labor costs, which include costs associated with recruiting and retaining employed staff, benefits and incentives, account for more than 50% of hospitals’ total expenses. Therefore, even a slight increase in these costs can have significant impacts on a hospital’s total expenses and operating margins.
  • In 2019, hospitals spent a median of 4.7% of their total nurse labor expenses for contract travel nurses, which skyrocketed to a median of 38.6% in January 2022.
  • Median hospital drug expenses by the end of 2021 were 28.2% higher than pre-pandemic levels through the end of 2019 and 36.9% higher per patient.
  • Overall, supply expenses for hospitals were 15.9% higher by the end of 2021 compared to the end of 2019 and 20.6% higher per patient. Looking specifically at ICUs, medical supplies in 2021 were 31.5% higher compared to 2019, and 31.8% higher per patient.
  • In April 2021, the Bureau of Labor Statistics reported that the Consumer Price Index (CPI) had the largest 12-month increase since September 2008. In fact, the CPI hit 40-year highs in February 2022. Overall, consumer prices rose by a historic 8.5% on an annualized basis in March 2022 alone.

The full report, along with a one page summary, can be found HERE.

All of these trends are taking place as hospitals and health systems continue to care for patients with COVID-19, treat sicker, more medically complex patients who may have put off care during the pandemic, and prepare for surges, with case rates climbing once again in many parts of the country.

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Contact:        Colin Milligan, (202) 638-5491, cmilligan@aha.org
                      Marie Johnson, (202) 626-2351, mjohnson@aha.org

About the American Hospital Association
The American Hospital Association (AHA) is a not-for-profit association of health care provider organizations and individuals that are committed to the health improvement of their communities. The AHA advocates on behalf of our nearly 5,000 member hospitals, health systems and other health care organizations, our clinician partners – including more than 270,000 affiliated physicians, 2 million nurses and other caregivers – and the 43,000 health care leaders who belong to our professional membership groups. Founded in 1898, the AHA provides insight and education for health care leaders and is a source of information on health care issues and trends. For more information, visit the AHA website at www.aha.org.

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