Health systems are re-configuring their workforce in the face of a shortage

Labor costs in hospitals continue to rise as nurses push for higher pay, requiring providers to readjust their workforce.

According to Kaufman Hall, total labor costs rose 12.6% from October 2020 to October 2021 and 14.8% from October 2019 to October 2021. analysis about 900 hospitals. Full-time equivalent per bed adjusted was down 4.5% year-over-year, while labor costs per adjusted statement increased by 16.3%, suggesting that higher wages caused by labor shortages across the country are driving up labor costs rather than headcounts, the report says.

“We continue to see labor costs going up much faster than you usually think,” said Eric Swanson, senior vice president of Kaufman Hall. “Comparing higher labor costs with lower discharges shows how higher nursing rates, longer stays, higher wages, and support for contract labor all lead to really dramatic increases in labor costs.”

CommonSpirit Health’s financial performance reflects national trends. Payroll costs in a system of 140 hospitals rose 16.3% year-on-year in the quarter ending September 30, mainly due to higher contract pay costs, allowances, overtime, etc.

As a result, CommonSpirit is redefining its staffing models. It assigns administrative duties to virtual registered nurses, such as supervising unlicensed staff, to facilitate the work of local nurses. Last year, CommonSpirit used a team-based patient care model with pharmacists, licensed nurses, nursing assistants and paramedics in its Iowa unit. The company plans to implement this model throughout the system over the next five years, the organization said in its most recent income statement.

Contract labor rates are out of control, according to Don Lilly, chief network and affiliate specialist at Alabama Medical University at Birmingham.

“If we can’t achieve income stability for many of these welfare hospitals, we are really concerned about what will happen in the next two to four years,” he said. “Some hospitals have benefited from CARES Dollars. But the costs of having to pay nurses to compete with recruiting agencies and other providers won’t go away when the pandemic is less than it is now. ”

UPMC’s labor costs are up nearly 5% in the first nine months of 2021 compared to the same period last year.

Travel times between hospitals are increasing due to a lack of staff. Patients, both COVID-19 and non-COVID-19, are being rejected as the labor market tightens and practitioners leave the profession, hospital executives and industry observers said.

“Nurses are leaving rural hospitals to go to their larger urban counterparts, become travel nurses, or work in regular retail stores like Walmart to raise wages. The stress of this pandemic has also made a number of nurses and administrators just say enough. and retire early. No one can blame them, “said Michael Topczyk, national leader of the Chartis Center for Rural Health, adding that some nurses are also leaving due to COVID-19 vaccination requirements. “This has led to a dramatic increase in costs.”

It was even more difficult to find specialized nurses, such as those with expertise in neurology and intensive care, health officials said.

Vanderbilt University Medical Center has tried to fill that gap with telemedicine providers and best practices, but there is still a supply-demand mismatch, said President and CEO Dr. Jeffrey Balser.

“We have to make sure we engage all practitioners at the highest level,” he said.

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