Facing Sicker Patients, Shrinking Workforce, and Financial Challenges, Hospitals Need Support Now

There are three things America’s hospitals have in common right now: sicker patients, a smaller workforce and higher labor and supply costs. Big or small, urban, and rural, hospitals are being asked to meet greater demands with fewer resources.

First, people are sicker. Many individuals who put off routine care the last few years are now arriving at the hospital with more serious conditions and in need of more intensive, sometimes lifesaving care. As a result, the average length-of-stay in hospitals increased 19% last year compared to 2019.

Second, our country does not have enough doctors, nurses, and health care workers to care for more patients. The challenges of stress, trauma and burnout among our caregivers have intensified, pushing health care professionals out of the workforce. In fact, over the course of the pandemic, the U.S. nursing workforce lost more than 100,000 nurses.

America’s health care workers are the backbone of hospitals and health systems. Without a strong workforce, our system of patient care collapses. It is as simple as that.

And third, hospitals and health systems are navigating unprecedented financial challenges that are causing an increased strain on an already fragile system. Workforce expenses, which generally account for more than 50% of hospitals’ total expenses, increased 19% per patient in 2021 compared to 2019. When it comes to per-patient drug costs, the trend was even more dramatic: Hospitals spent nearly 37% more in 2021 than they did in 2019. 

A recent report found that 2022 was the worst financial year for U.S. hospitals and health systems since the start of the COVID-19 pandemic with approximately half of the nation’s hospitals ending the year operating at a financial loss. The financial outlook for 2023 is also bleak as all these factors persist. 

Another key factor is that government sets rates for hospital inpatient, outpatient and other care under Medicare and Medicaid — and those rates are less than the costs of providing those services.  The financial loss from combined underpayments from Medicare and Medicaid to hospitals was a staggering $100 billion in 2020, up from $76 billion in 2019. 

Across all hospitals, Medicare and Medicaid together make up over two thirds of total inpatient volume. This, on top of the fact that for 94% of hospitals, Medicare and Medicaid combined account for at least half of their inpatient volume means the fixed nature of these payments puts incredible stress on hospitals and health systems. All these factors taken together shows how it can be nearly impossible for hospitals to find a way to stable financial ground.

What do all these challenges mean for patients? They could mean longer wait times for care in the emergency department; delays for surgery, imaging, and diagnostic services; and having to travel further to receive care. All of these can have long-lasting impacts on a person’s health.

So, what needs to happen? Here are just a few things we can do:

1. Congress must provide much-needed support and resources to help hospitals and health systems meet their mission of advancing health for each individual and community. Among other provisions, Congress should pass legislation to support the current health care workforce and increase the pipeline for the future, address patient discharge backlogs, and hold commercial health insurers accountable for policies that compromise patient safety and add burden to care providers.
   
2. We must support our current workforce and recruit and train the next generation of health care professionals. Health care careers are a calling, and hospitals and health systems are committed to making the work environment safe and rewarding. However, we can’t do this alone. We need support from other stakeholders, including commercial insurance and information technology companies, to develop and implement the tools, processes and other solutions that make it easier and more enjoyable for caregivers to do their jobs. 
   
3. Finally, individuals must do their part to protect themselves and health care workers by staying up to date on vaccines for both the flu and COVID-19. Stay home if you’re sick and practice good hygiene. Doing so will not only help individuals stay healthy, but it will also go a long way to relieving capacity challenges hospitals and health care workers are facing. 

Supportive public policies, a robust workforce and healthy practices are practical solutions we can all get behind to ensure a strong health care delivery system and a healthier America.

Rick Pollack is the president and CEO of the American Hospital Association.