October 28, 2022 – Operating costs are going up in healthcare centers and hospitals across the country due to growing inflationary pressures, challenges with staffing, and supply chain disruptions, according to a report from the Medical Group Management Association.
The report broke down each of those two sectors into three areas: primary care, surgical facilities and nonsurgical facilities. The only area not experiencing a rise in operating costs over the 2019 to 2021 period was hospital-owned primary care facilities, where such expenses fell almost 11 percent.
“Rising expenses and the persistent challenges to restore productivity and revenue in healthcare organizations have led to several health systems reporting significant losses and others with many operating margins under 1 percent,” the report said.
The staffing shortage is one of the biggest cost factors. Practice leaders identified staffing as the greatest financial challenge at the beginning of 2022, and is still a huge pain point for healthcare. “Labor is up 30% from a year ago,” one medical group leader said in the report. “That has turned our margin negative.”
Medical centers will have to closely monitor staff overtime, boost reimbursement from payers by offering incentives, and reduce spending on unnecessary supplies.