Dive Brief:
- More than a year and a half into the COVID-19 pandemic, labor and supply costs are still driving hospitals’ expenses upward as revenues remain lower alongside patient volumes, according to Kaufman Hall’s 2021 State of Healthcare Performance Improvement Report out Monday.
- Among 73 hospital and health system leaders surveyed, 100% said they faced staff burnout, trouble filling vacancies, wage inflation and high turnover rates, the report found. Almost 90% said they’ve increased base salaries.
- At the same time, 99% of respondents said they’ve faced challenges procuring supplies, including shortages of key items and significant price increases.
Dive Insight:
Hospitals have struggled financially throughout the pandemic amid widespread delays in elective care and localized COVID-19 surges. Well over a year later, the pandemic is still straining providers and undermining their ability to get their operations back on track.
Supply chain woes are still an issue keeping expenses high. A report published Wednesday by purchasing organization Premier found that while personal protective equipment costs have declined since peaking last summer, hospitals are still spending about $12.45 per patient per day on PPE, compared to $7 before the pandemic.
Labor shortages also persist as a challenge, exacerbated by widespread burnout. Roughly two-thirds of respondents said they are dealing with high turnover among clinical staff, and 65% said they’re dealing with wage inflation.
At the same time, volumes overall are still below pre-pandemic levels in many service lines. Cardiology and cardiovascular services have seen the most significant rebound, though just 44% of those respondents said they've seen a return to pre-pandemic levels, according to the report.
And the pandemic caused 75% of survey respondents to experience an adverse revenue cycle impact, like a higher percentage of Medicaid patients and increased rates of insurance denials.
Systems will have to either rethink or radically revise how their organizations work going forward, "which will require revisiting the premise that not-for-profit hospitals and health systems can lower their costs while maintaining control over all aspects of operations," the report said.
More than half of respondents said the pandemic has made their organization adopt new processes, positions or departments that it plans to keep in place.
"For most institutions, navigating today’s financial and operational challenges and positioning for future growth requires radical change that is achieved only with new thinking and partnerships," Kaufman Hall Managing Director Lance Robinson, who leads the firm’s performance improvement practice, said in a release.
"Now more than ever, hospitals need to build relationships with physician groups, insurers, retailers, vendors, and other providers. It’s increasingly apparent that most organizations don’t have the resources they need to evolve on their own," Robinson said.