October 27, 2022

Report: Hospitals will likely experience the worst financial year in decades

By: Bridget Brown
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Editor's Note

On October 25, Health Affairs reported that healthcare systems continue to face challenges in a post-pandemic environment but are likely to have the worst financial year in decades, according to Becker’s Hospital CFO Report October 26.

US hospitals saw fluctuations in operating margins in 2022 but are still operating well below pre-pandemic level. Despite some improvement earlier in the year, the Health Affairs report noted that healthcare systems are still struggling to balance revenues and high expenses.

These financial challenges are not likely to be resolved in the near future; a primary cause of this is fluctuations in patient volume. Economic uncertainty and threat of recession are affecting individual decisions about surgical procedures and medical treatment. According to the Health Affairs report, one in five adult patients reported delaying or forgoing treatment in response to inflation. The disruption in patient volume will continue to widen the space between costs and payments. 

The labor shortage is also a factor contributing to financial challenges, Becker’s reported, particularly nursing labor, which has seen a loss of almost 105,000 employees. Labor costs have extensively increased due to a reliance on contract nurses and extended overtime hours. The shortage of new nurses is predicted to reach 450,000 by 2025, according to the report.

Moving forward, the report noted, healthcare systems need to plan for this to be a long-term issue and take measures to stabilize profit and reduce costs. Read the full Health Affairs report here.

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