The growing labor shortage in the hospital and healthcare sector is having a seriously adverse effect on hospital finances, as wages and travel nurse agency costs soar at the same time that other healthcare expenses are increasing.
  
Premier, the healthcare improvement company best known for its group purchasing, released a study last week showing that U.S. hospitals and health systems are paying $24 billion more per year for qualified clinical labor than they did pre-pandemic. Approximately two-thirds of hospitals' costs are from wages and salary. 
  
Premier found that “overtime hours are up 52 percent as of September of 2021 when compared to a pre-pandemic baseline. At the same time, use of agency and temporary labor is up 132 percent for full-time and 131 percent for part-time workers. Use of contingency labor (or positions created to complete a temporary project or work function) is up nearly 126 percent.” Overtime and use of agency staff typically add 50 percent or more to a typical employee’s hourly rate, according to Premier.
The Premier study follows a September study from Kaufman Hall projecting that hospitals nationwide will lose an estimated $54 billion in net income over the course of the year, even taking into account the funding they received from the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act. High-acuity patients and other expense costs, including labor costs, are leading to the shortfall.
  
Moody’s Investor Services also last week joined the chorus of analysts predicting bad news for hospitals. Moody’s predicted hospital margins would continue to fall, driven mainly by the rise in COVID-19 cases and the decline in workforce.
  
“Over the next year, we expect margins to decline given wage inflation, use of expensive nursing agencies, increased recruitment and retention efforts, and expanded benefit packages that include more behavioral health services and offerings such as child care,” Moody’s wrote. “Even after the pandemic, competition for labor is likely to continue as the population ages — a key social risk — and demand for services increases.”
  
Employment in the healthcare sector fell by an estimated 17,500 jobs last month, according to preliminary data from the U.S. Bureau of Labor Statistics. The decline was the second-biggest in 2021, behind January’s drop of 80,500 jobs.

A story in the national press last week that focused on how some large health insurance companies are lagging in making billions of dollars in payments to hospitals resonated with many in the Massachusetts hospital community.
  
The Kaiser/USA Today story focused on Anthem and United Health Care and the fact that hospitals across the country are experiencing months-long delays in getting paid, having previously paid claims retroactively declined, and spending time advocating for patients facing denials for medically necessary services. Unicare, which offers coverage to state employees through the Group Insurance Commission, is an Anthem company, and United Health Care has a growing presence in Massachusetts through fully funded, self-funded, and Medicare products. 
  
Hospitals say that Anthem’s frequent changes to enrollees’ coverage, delays in patient care resulting from excessive prior authorization requirements, and growing failure to pay claims in a timely manner all hurt not only hospitals, but the patients they serve. A significant problem is that Anthem, United Healthcare, and many other insurers are increasingly mandating that services be provided outside of the hospital regardless of medical necessity.
  
“Patients are facing greater hurdles to accessing care; clinicians are burning out on unnecessary administrative tasks; and the system is straining to finance the personnel and supplies needed to meet the demands of a surging fourth COVID-19 wave,” the American Hospital Association wrote to Anthem in September.
  
Karen Granoff, MHA’s Senior Director of Managed Care, says that both the Managed Care and Case Management workgroups, comprised of MHA members across Massachusetts have experience with the practices of the large, national insurers.
  
“A large part of both workgroups’ time is devoted to health insurance company unilateral benefit and procedural changes, delays and denials of care, which have only increased during a period when hospitals and patients are stressed to the max by the pandemic,” Granoff said.

With so many options available, identifying the next step for care following a medical event or hospitalization can be daunting – both for patients and providers alike. To help address this challenge, healthcare professionals from across the Massachusetts care continuum constructed a first-of-its-kind Post-Acute Care Guide. The guide will be released this Wednesday, and will counsel healthcare professionals, and those in their care, on which options are best for their unique needs. Many people need post-acute care to recover from an injury, illness, surgery, and/or hospitalization. Post-acute care – provided outside of the traditional hospital setting – may include rehabilitation; physical, speech or occupational therapy; comfort care that focuses on providing relief from pain and other symptoms of a serious illness; home care; or end-of-life care. Join MHA on October 13 as we talk to the leaders that helped lead the creation of the “Care After the Hospital” guide. Speakers include Lou Woolf, president and CEO, Hebrew Senior Life; Robin Hynds, COO & SVP, Lawrence General Hospital; and Maureen Banks, COO and CNO, Spaulding Rehabilitation Network. Register here.

Mass General Brigham has named Ross Zafonte, DO, as the new president of Spaulding Rehabilitation Hospital and its network of facilities. Zafonte has been serving as interim president since March 2021 when the former president, David Storto, left to take a position at Wellforce. Zafonte is an internationally recognized authority in traumatic brain injury, and wrote an authoritative textbook on brain injury care. According to the media release announcing his appointment, Zafonte is currently directing several clinical trials focused on understanding the mechanisms of recovery after brain and spinal cord Injury. His research is funded by the National Institutes of Health, Department of Defense, and the National Institute on Disability, Independent Living, and Rehabilitation Research. He received his medical degree from Nova Southeastern College of Osteopathic Medicine and completed his residency at Mount Sinai Hospital Medical Center.

Workforce Challenges and Solutions from the Frontlines of Nursing

Tuesday, October 19; 9 a.m. – 12:30 p.m. ET

The Massachusetts Health & Hospital Association conducts an annual survey to collect metrics related to nurse staffing and other positions. During this virtual conference, attendees will learn about key highlights and insights from the latest revamped nursing survey and will also receive an exclusive copy of the report. 
 
“Workforce Challenges and Solutions from the Frontlines of Nursing” will cover the latest trends and innovations from the nursing workforce and leadership. In this program, you will hear from local and national nursing thought leaders on how frontline nurses are using data for decision making, along with case studies and best practices from acute and post-acute care settings. Register today and don’t miss out on your opportunity to learn from the top leaders in nursing.