Connecticut hospitals see expenses rise $3.5 billion post-pandemic

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Due to rising medical supply costs as well as the cost of drugs and labor, total expenses for Connecticut hospitals in 2022 were $3.5 billion higher than they were before the pandemic – a more dire predicament than that seen by hospitals nationwide, according to new findings from the Connecticut Hospital Association.

Fiscal year 2022 was a rough one for hospitals in the state, which saw about $164 million in losses. Without the benefit of federal relief funds, hospitals would have lost close to $1 billion more over the last three years, numbers showed.

Rising expenses for labor, drugs, and medical supplies are major drivers of the expense increase – and total expenses are cumulatively well above pre-pandemic levels.

On top of that, hospitals are caring for patients with more severe health needs, resulting in longer lengths of stay, increased expenses and a reduction in revenue. And labor shortages in post-acute settings are preventing timely discharge of patients from the hospitals, leading to increased expenses without a corresponding increase in revenues.

WHAT'S THE IMPACT

Total hospital operating margin for Connecticut hospitals was -1% during the year, and without federal relief funds the margin would have been -5.9% in FY2020.

Operating expenses increased 23% over that time compared to pre-pandemic levels, which outpaces national hospital expenses for the last three years. In the three years combined following the start of the pandemic, Connecticut hospitals' income was a collective $1.6 billion lower than pre-pandemic levels.

In terms of the healthcare workforce, hospitals  have made significant investments in recruitment and retention, but have also had to turn to costly temporary contract labor. Salaries and wages are up 20% during the pandemic, increasing by $1 billion, and contract labor costs have increased 61%.

While expenses have risen dramatically, payments for the ballooning cost of care have not kept pace.  In 2021, Connecticut hospitals incurred $1.12 billion in Medicare losses, and $993 million in Medicaid losses.  Medicaid continues to pay significantly less than the cost of care – only paying about 68 cents on the dollar.

THE LARGER TREND

According to the CHA, the state legislature should provide direct funding to hospitals and health systems for recruitment, retention and training for healthcare workers, and for relief from the increased cost of contract labor and crucial staffing premium pay.

Healthcare recruitment, retention, and training programming should include, but not be limited to, cash recruitment bonuses, student loan payment assistance, cash retention bonuses, tuition assistance, workplace violence prevention, and other forms of training programming, CHA said.
 

Twitter: @JELagasse
Email the writer: Jeff.Lagasse@himssmedia.com