Hospitals say they are in tough shape amid workforce crisis as COVID-19 relief dries up
Abigail Adcox
Hospitals are facing financial downfalls as billions in COVID-19 relief funding dries up, saying that a growing healthcare workforce shortage poses a threat to their bottom line.
Despite receiving $175 billion in federal subsidies to stay afloat during the COVID-19 pandemic, hospitals reported their worst financial year since the start of the pandemic in 2022, as growth in expenses such as labor costs outpaced revenue, according to a report from Kaufman Hall.
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“This has been an ongoing challenge, really, through the pandemic, before the pandemic, and now as we are sort of coming out of the pandemic, it is a real struggle for hospitals and healthcare, one, to get the workforce that they need and then to continue to pay for [it],” said Lisa Kidder Hrobsky, senior vice president for advocacy and political affairs at the American Hospital Association. “Workforce is a massive part of hospitals expenses, and so it is more expensive than ever to pay for workforce when you can find workforce.”
The United States is estimated to see a shortfall of up to 124,000 physicians by 2034, including 48,000 primary care doctors, according to data from the Association of American Medical Colleges. The looming shortage of healthcare workers has been hanging over the industry for years, though hospitals say they are having to pay current healthcare workers more in order to retain staff.
Dr. Don Williamson, president of the Alabama Hospital Association, said state hospitals saw income decline by $1.5 billion from 2019 to 2022, largely driven by increased costs of labor that went up by nearly $1.4 billion. Without federal funding, Alabama hospitals would have seen income decrease by $2.4 billion, Williamson added.
“We have not seen a corresponding increase in revenue to keep up with our increased expenses,” Williamson said.
The shortage of healthcare workers has attracted bipartisan attention, though some lawmakers have been cautious to throw more money at the issue after significant pandemic-era investments.
The Coronavirus Aid, Relief, and Economic Security, or CARES Act, in 2020 included $100 billion for the Provider Relief Fund to aid healthcare providers for lost COVID-19 revenue, which could be used for healthcare systems to recruit and retain personnel. The Biden administration also allocated $103 million from the American Rescue Plan of 2021 to improve retention and well-being among healthcare workers.
Critics suggest that hospitals are not painting a full picture of their finances.
“They’re giving this dire picture of their economic situation and some of them are publicly traded or have to submit their public earnings reports that just don’t at all match up with that. Some of them are expanding, actually, many of them are just constantly expanding and making new capital expenditures,” said James Gelfand, president of the ERISA Industry Committee, which lobbies on behalf of large self-insured employers.
In North Carolina, executives of the largest hospital systems in the state made more than $1.75 billion over the last 12 years and almost doubled their salaries in the last five years, while nurse and physician wages have risen far more slowly in that period, according to a report released by the state treasurer’s office.
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“When somebody cries about not having enough money to pay their nurses, it’s because, generally speaking, when the nurse pay has basically stayed stagnant for the last five years in many instances, the CEO pay’s double,” said North Carolina State Treasurer Dale Folwell. “I don’t know of any more mathematical example of putting profits over patients than that.”
Top senators on the Health, Education, Labor and Pensions Committee have requested national input from healthcare providers and stakeholders to determine underlying causes of the healthcare workforce shortfalls and find ways to address them. Sens. Bernie Sanders (I-VT) and Bill Cassidy (R-LA) said in a statement they intend to “identify bipartisan solutions” to remedy the shortage.