AHA: Hospitals expenses increased 17.5% from 2019-2022

AHA: Hospitals expenses increased 17.5% from 2019-2022 unknown AHA: Hospitals expenses increased 17.5% from 2019-2022FierceHealthcare

Hospitals underscored their push for greater federal financial support this week with a new report highlighting a 17.5% increase in hospital expenses from 2019 to 2022 that more than doubled the period’s 7.5% rise in Medicare reimbursement.

Published Thursday, the American Hospital Association’s (AHA's) latest numbers outlined a 20.8% increase in hospitals’ labor costs from 2019 through 2022 driven by a 258% spike in contract labor expenses.

Labor represents nearly half of a hospital’s operating expenses and has become a key issue for the industry amid widespread shortages.

Still, AHA wrote that hospitals were being hammered on all sides with commensurate increases in drug expenses per patient (19.7%) and supply expenses per patient (18.5%) along with purchased service expenses (18%) during the four-year period.

“Rising costs for drugs, supplies and labor coupled with sicker patients, longer hospital stays and government reimbursement rates that do not come close to covering the costs of caring for patients have created a dire situation for hospitals and health systems,” AHA President and CEO Rick Pollack said in a release.

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The group also took a swing at “burdensome insurer policies,” such as “unnecessary” prior authorizations, as a source of increased administrative costs and a driver of clinician burnout. Citing a survey conducted on behalf of the AHA by Morning Consult, the group said that almost three-quarters of nurses reported increased insurer-required administrative tasks during the previous five years and almost 9 in 10 said it had negatively impacted patient clinical outcomes.

Looking ahead, AHA highlighted the upcoming conclusion to the public health emergency’s various waivers and flexibilities—particularly the disenrollment of millions of current Medicaid beneficiaries—as another area of concern for hospitals.

“Undoubtedly, these coverage losses will drive higher rates of uninsured and underinsured individuals, raising hospitals’ uncompensated care costs and potentially negatively impacting disproportionate share payments as well as 340B program eligibility, both of which allow hospitals to offset some of the expense increases as well as furnish programs and services critical to patients,” AHA wrote in the report.

“Further, the ending of regulatory relief through the 20% Medicare inpatient prospective payment system add-on payment for beneficiaries diagnosed with COVID-19 to offset the cost of highly complex care for these patients, will certainly add financial pressure to an already fragile situation for hospitals and health systems," the organization wrote.

AHA paired its latest warnings with a reiterated list of policy asks Congress should prioritize to “ensure hospitals have the ability to continue taking care of the sick and injured.” These included:

• Enacting new policies to bolster the workforce and the clinician training pipeline
• Rejecting Medicare and Medicaid pay cuts to hospitals
• Establishing temporary per diem payments to address patient discharge backlogs
• Pressuring the Centers for Medicare & Medicaid Services to make retrospective adjustments to the FY2022 market basket update
• Creating a “metropolitan anchor hospital” designation for facilities serving marginalized communities

“This is not just a financial problem, it is an access problem,” Pollack said. “When healthcare providers cannot afford the tools and teams they need to care for patients, they will be forced to make hard choices and the people who will be impacted the most are patients. We can’t let that happen. Congress and others must act to preserve the care our nation needs and depends on.”