2022 is proving to be the most difficult year financially for healthcare providers since the COVID-19 pandemic began in 2020. Staffing shortages, skyrocketing labor costs, continuing supply chain disruptions, inflation, rising interest rates, and volatile markets are pressuring both revenue and expenses. One interviewee for this report, who has spent 40 years in healthcare, described this as the most difficult operating environment he has ever seen.
Workforce concerns are top of mind. There simply are not enough candidates available to fill empty positions, with particularly acute problems in nursing. Two-third of our respondents report that staffing shortages have required their facilities to run at less than full capacity, with direct effects on revenue. The need to rely on contract labor to help plug staffing gaps has resulted in labor costs that are unsustainable over the long term, but several interviewees said that their organizations are planning for at least a three-to-four-year transition from the current state to a more stable labor market.
Staffing shortages are impacting performance in other areas. Many of our respondents reported an increase in inpatient length of stay; our interviewees attributed this increase largely to staffing shortages at post-acute care facilities. Without adequate staff, these facilities also have had to reduce capacity, resulting in delays in discharging patients from inpatient care.
A bigger question coming out of this year’s survey and respondent interviews is whether the pandemic will, in hindsight, mark an inflection point in healthcare. Several interviewees questioned whether volumes will ever return to pre-pandemic levels; the pandemic did little to slow the movement of care into outpatient, virtual, and home settings and may have even accelerated it. New technologies and treatments are reducing the need for surgical interventions. If this is the case, performance improvement efforts will have to be matched with larger structural transformations over the long term.
Our 2022 report highlights performance improvement trends in the areas of workforce, volume and revenue, supplies and purchased services, and the physician enterprise. Each section also provides “action items” that can enhance both short-term and long-term performance. We thank all our survey respondents and interviewees for their contributions to this year’s report.
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