CHA News

Report Details Severity of Financial Challenges Facing Hospitals 

Last week, the American Hospital Association released a report from Kaufman Hall, a nationally renowned consulting firm, showing that losses in the billions of dollars for hospitals and health systems are expected through 2022, resulting in the most financially difficult year for the field since the beginning of the COVID-19 pandemic in early 2020. 

Hospitals and health systems continue to face intense pressure on staff and resources while coping with rising expenses for supplies, drugs, medical equipment, and workforce. As a result, even the most optimistic projections for the entirety of 2022 indicate margins will be down 37% compared to pre-pandemic levels, with more than half of hospitals operating in the red. Under a pessimistic scenario for the rest of 2022, margins could be down as much as 133% compared to pre-pandemic levels, with more than two-thirds of hospitals operating in the red. 

Other findings from the report include: 

  • Hospital and health system expenses are expected to increase by nearly $135 billion in 2022 over 2021 levels. A large component of that has come from expenses related to retaining and supporting the workforce. 
  • Employed labor expenses are projected to rise by $57 billion more than last year and contract labor by $29 billion. Contract labor expenses are nearly 500% higher than pre-pandemic levels. This has played a significant role in driving expense growth for hospitals.  
  • The remaining $49 billion in added expenses in 2022 include those for supplies, drugs, and equipment, which have all increased significantly from pre-pandemic levels. 

CHA wants to make sure that state legislators understand the impact of these financial challenges on patients and communities. As we document and share these outcomes — such as service line closures, layoffs, bond rating reports, and more — we welcome your anecdotes about how the financial landscape threatens patient care. Please send any information or inquiries to David Simon at [email protected].