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Ten Trends Blog #1

Ten Trends for 2023: Financial Woes and Staffing

January 17, 2023
January 17, 2023

HealthStream recently published its annual white paper on the top ten trends healthcare leaders can expect in the coming year. The paper was authored by Robin Rose, MHA, Thought Leadership Consultant. This blog will focus on the first two of the ten trends identified in the paper. Future blogs will cover the remaining trends.

Rose began with a George Miller quote from a March 28, 2022, Health Affairs article. “With all the short-term disruption seen in the health care sector since the pandemic began… the longest lasting impacts may be accelerations of shifts that were already underway.” While the pandemic created some new issues for healthcare organizations, it also greatly exacerbated existing issues such as the staffing crisis.
 

Many Hospitals Face Financial Woes

Hospitals experienced unprecedented financial pressures and deeply negative margins in 2022. Even the most optimistic projections for 2022, estimate that operating margins will be 37% lower than 2019’s pre-pandemic levels. Less optimistic estimates project a staggering 133% decline.

Bad news becomes worse as it appears that a quick turnaround is unlikely. According to experts, the primary drivers of these negative margins will linger throughout 2023.

Major contributors to the poor financial performance were:

  • Healthcare expenses that increased exponentially. The cost of equipment and supplies skyrocketed during this time and the issue was further complicated by significant supply chain issues.
  • Labor shortages and significant numbers of resignations caused labor costs to surge, forcing hospitals to rely on agencies for temporary (more expensive) staff.
  • The cancellation of many elective surgeries resulted in a substantial loss of revenue.
  • The high costs associated with caring for critically ill patients also contributed.

Not surprisingly, healthcare financial performance for 2022 is predicted to be the worst on record. Persistent staffing issues, rising costs and supply chain concerns are likely to make 2023 financially disappointing as well.
 

Staffing Is and Will Remain a Top Challenge for Healthcare Leaders

While financial concerns will persist into 2023, staffing and labor costs will remain a top issue for healthcare leaders, leading to increased healthcare expenses. A September, 2022 poll conducted by MGMA revealed that 58% of respondents indicated that staffing would be their main concern going into 2023. Respondents reported that staffing was significantly ahead of expenses (20%), revenue (17%), and technology and other (2%) on their list of concerns.

“The Great Resignation” became a much talked about phenomenon during the pandemic and healthcare was far from immune from its impact. An estimated 333,942 healthcare workers left the workforce in 2021.

These staffing issues came with an enormous cost. From 2019 to 2021, the cost of labor per patient per day rose 8%, causing the average 500-bed hospital's labor expenses to rise approximately $17 million. The figure for 2022 is expected to be 5% higher.

These rising expenses have had far-reaching impact. According to Kaiser Health News, many healthcare organizations have laid off non-essential workers and have also eliminated some healthcare services. Obstetrics and maternity services appear to be the most frequently eliminated, but emergency, inpatient acute-care and/or pediatric services may be at risk to, according to Journal of Urgent Care Medicine.

HealthStream explores the shifts and trends on the horizon that may impact your organization in our Annual Ten Trends Series.