News: Hospitals, health systems face worsening costs, AHA says

CDI Strategies - Volume 18, Issue 21

The American Hospital Association (AHA) recently released a report detailing the increasing financial tolls on hospitals and health systems and the bleak prospects for United States healthcare, according to the National Association of Healthcare Revenue Integrity (NAHRI).

The report noted that while “some hospital and health system finances have experienced modest stabilization from historic lows in 2022,” the AHA found that the “hospital field is still far from where it needs to be to meet the demand for care, invest in new and promising technologies and interventions, and stand ready for the next health care crisis.”

Here are some highlights from the report:

  • Underpayments from Medicare and Medicaid totaled nearly $130 billion in 2022, and Medicare paid just 82 cents for every dollar hospitals spent caring for patients—resulting in a shortfall of almost $100 billion.
  • Hospitals are spending just under $20 billion annually in appealing denials—more than half of which was wasted on claims that should have been paid out at the time of submission.
  • Hospitals spent $115 billion on drug expenses in 2023 alone. One of the factors fueling this growth is drug company decisions to impose large price increases on existing drugs, as well as the introduction of new drugs at staggeringly high prices.
  • Medical supply expenses collectively accounted for $146.9 billion in 2023, an increase of $6.6 billion over 2022.
  • Hospitals’ labor costs increased by more than $42.5 billion between 2021 and 2023 to a total of $839 billion, accounting for nearly 60% of the average hospital’s expenses. Hospitals continue to turn to expensive contract labor to fill gaps and maintain access to care, spending approximately $51.1 billion on contracted staff in 2023.

Editor’s note: To read the AHA report, click here. To read NAHRI’s coverage, click here.

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