April 28, 2023 – A report from the American Hospital Association found that rising national financial expenses could impact healthcare access. Health systems continue to face significant challenges post-pandemic such as rising costs for labor, supplies, and drugs, workplace shortages, sicker patients, and longer hospital stays. These factors have all increased pressure on the national healthcare system. Overall hospital expenses have increased by 17.5% between 2019 and 2022, according to a 2023 report from the American Hospital Association (AHA).
“This is not just a financial problem; it is an access problem. 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,” said AHA President and CEO Rick Pollack.
The report found:
- Overall hospital expenses increased by 17.5% between 2019 and 2022. This far outpaced Medicare reimbursement, which only increased 7.5% during this same time.
- Labor costs, which on average account for about half of hospitals’ total budget, increased 20.8% between 2019 and 2022. This is in large part due to a greater reliance on contract staffing agencies to fill workforce gaps and to meet patient demand. The outcome of this has been a staggering 258% increase in total contract labor expenses for hospitals in 2022 compared to 2019.
- For the first time in history, the median price of a new drug exceeded $200,000 – more than triple the median annual household income in the U.S. At the same time, price increases for existing drugs continue to outpace inflation, which helped drive a 19.7% increase in drug expenses per patient between 2019 and 2022.
- Hospital supply expenses per patient increased 18.5% between 2019 and 2022, outpacing increases in inflation by nearly 30%. Specifically, hospital expenses for emergency services supplies – which include ventilators, respirators, and other critical equipment – experienced a nearly 33% increase during the same time period.
- Purchased service expenses, which are expenses hospitals incur to create operational efficiencies such as IT, environmental services and facilities, and food and nutrition services increased 18% between 2019 and 2022.
- The burden associated with insurer-required administrative tasks also contributes to rising expenses and negatively affects patient care. Nearly three-fourths of nurses reported increases in insurer-required administrative tasks for medical services over the last five years. Nearly 9 in 10 nurses reported insurer administrative burden had negatively impacted patient clinical outcomes.