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2019 Year-In-Review
Expense
Expense by Region ?
Total Expense per Adjusted Discharge rose for hospitals in all regions of the country in 2019, both year over year and compared to budget. The Midwest saw the greatest increases at 6.0 percent year over year and 3.5 percent to budget. Hospitals in the West saw the lowest increases, up 1.9 percent year over year and 0.6 percent to budget.
Labor Expense per Adjusted Discharge rose across all regions in 2019, with the Northeast/Mid-Atlantic seeing the biggest year-over-year jump of 4.1 percent, performing 2.6 percent above budget. Despite the year-over-year increases, hospitals in the Great Plains, South, and West fell below budget for Labor Expense per Adjusted Discharge in 2019.
Labor Expense
Non-Labor Expense
Supply Expense
Drug Expense
Purchased Service Expense
FTE per AOB
Meanwhile, FTEs per AOB were down across the board. Four of the five regions experienced moderate year-over-year decreases for this metric of about -1.5 percent. The Great Plains was an outlier, with FTEs per AOB falling -7.6 percent compared to 2018, and -8.0 percent below budget.
Non-Labor Expense per Adjusted Discharge was up year over year and above budget for hospitals in all regions. The Great Plains saw the biggest jump, up 6.7 percent compared to 2018 and 3.6 percent to budget.
Supply Expense per Adjusted Discharge was a major driver of increased non-labor expenses. Hospitals in all regions saw year-over-year increases for this metric ranging from 1.0 percent in the Great Plains to 7.1 percent in the Midwest. The level of increases were unexpected, as all regions also performed above budget for Supply Expense per Adjusted Discharge.
Drug Expense per Adjusted Discharge increased year over year across all regions, with the West experiencing the biggest jump of 11.1 percent compared to 2018. The South and Northeast/Mid-Atlantic were the only regions to fall below budget expectations for Drug Expense per Adjusted Discharge.
Purchased Service Expense per Adjusted Discharge was above budget and up year over year in the South, Great Plains, Northeast/Mid-Atlantic, and Midwest. The West was the only region to see a slight year-over-year decrease in Purchased Service Expense of -0.5 percent compared to 2018.
National Expense Observations
Hospitals across the country saw expenses increase in 2019 compared to 2018. Total Expense per Adjusted Discharge rose 3.4 percent or 294.5 bps year over year and was 1.4 percent to budget.
Labor Expense per Adjusted Discharge was up 2.6 percent or 91.0 bps for the year compared to 2018, but only slightly above budget at 0.2 percent. Full-Time Equivalents (FTEs) per Adjusted Occupied Bed (AOB) were the only expense metric to see a year-over-year decline, falling -1.8 percent or -0.07 bps compared to 2018, and performing -1.2 percent to budget.
Non-Labor Expense per Adjusted Discharge was up 4.0 percent or 197.6 bps year over year and performed 1.9 percent to budget. The increase is due in part to increases in Supply Expense per Adjusted Discharge, which saw the biggest year-over-year jump at 5.7 percent or 71.0 bps, at 2.5 percent above budget expectations. Drug Expense per Adjusted Discharges also increased significantly at 4.5 percent or 12.6 bps compared to 2018, but was -0.9 percent below budget.
Purchased Service Expense per Adjusted Discharge also rose year over year, up 3.9 percent or 14.7 bps compared to 2018 and 1.8 percent above budget.
Unless noted, figures are Actuals and Medians
Budget Variance
Year Over Year
Total Expense per Adj. Discharge
1.4%
3.4%
Labor Expense per Adj. Discharge
0.2%
2.6%
FTEs per AOB
(1.2%)
(1.8%)
Non-labor Expense per Adj. Discharge
1.9%
4.0%
Supply Expense per Adj. Discharge
2.5%
5.7%
Drug Expense per Adj. Discharge
(0.9%)
4.5%
Purchased Service Expense per Adj. Discharge
1.8%
3.9%
Expense by Bed Size
As with the regional results, Total Expense per Adjusted Discharge was up year over year and compared to budget across all bed-size cohorts. Hospitals with 200-299 beds saw the biggest increase of 5.9 percent compared to 2018, while hospitals with 500 beds or more saw the greatest variance to budget of 4.5 percent.
All bed-size cohorts saw year-over-year increases in Labor Expense per Adjusted Discharge, ranging from a low of 1.8 percent for hospitals with 26-99 and 300-499 beds, to a high of 5.8 percent for hospitals with 200-299 beds.
FTEs per AOB were down year over year across all bed-size cohorts. Hospitals with 0-25 beds and 200-299 beds saw the greatest year-over-year decreases of -5.6 percent and -5.7 percent, respectively. Most bed-size cohorts were below budget for this metric, with the exceptions of hospitals with 100-199 and 500 or more beds, which both were above budget for FTEs per AOB.
Labor Expense
Non-Labor Expense
Supply Expense
Drug Expense
Purchased Service Expense
FTE per AOB
Non-Labor Expense per Adjusted Discharge rose year over year and compared to budget across all bed-size cohorts in 2019. Hospitals with 200-299 beds saw the biggest year-over-year increase at 7.6 percent, while hospitals with 500 beds or more saw the greatest variance to budget of 5.5 percent.
Supply Expense per Adjusted Discharge saw some of the biggest year-over-year increases, ranging from 3.2 percent for hospitals with 300-499 beds to 6.7 percent for hospitals with 100-199 beds. Five of the six bed-size cohorts also were above budget for Supply Expense per Adjusted Discharge in 2019, with the smallest hospitals of 0-25 beds being the only cohort to perform in line with budget expectations for this metric.
Hospitals in all regions across the country saw year-over-year increases in Drug Expense per Adjusted Discharge. However, the increases were largely anticipated. Larger hospitals with 300-499 and 500 or more beds were the only bed-size cohorts to see Drug Expense per Adjusted Discharge rise above budget for 2019.
Purchased Service Expense per Adjusted Discharge was above 2018 performance and above budget for five of the six bed-size cohorts. Hospitals with 26-99 beds also were up year over year, but fell below budget at –1.7 percent.
Expense Trends
Total Expense per Adjusted Discharge was consistently above 2018 levels throughout most of 2019. Despite variations from month to month, however, the overall trend was relatively flat. April was the only month to see Total Expense per Adjusted Discharge fall below 2018 levels, at -1.0 percent.
Labor Expense per Adjusted Discharge rose steadily throughout the year. This metric was at or above 2018 levels for 10 months of the year, and peaked at 6.1 percent year over year in November. By contrast, FTEs per AOB were consistently at or below 2018 levels, with the trend-line steadily decreasing throughout 2019 toward a low of -5.2 percent in December.
Labor Expense
Non-Labor Expense
Supply Expense
Drug Expense
Purchased Service Expense
FTE per AOB
Non-Labor Expense per Adjusted Discharge saw year-over-year increases for most of 2019, only dipping slightly below 2018 levels twice—in April and December. Even so, the overall trend for this metric saw a slight decline in year-over-year variance throughout the year.
Supply Expense per Adjusted Discharge was consistently above 2018 levels throughout all 12 months of 2019. Hospitals saw the most significant increases in the first half of the year, after which the year-over-year variances narrowed to a low of 3.0 percent in December.
Drug Expense per Adjusted Discharge also saw consistent increases above 2018 levels last year, but the variances narrowed over the course of the year. Drug Expense per Adjusted Discharge reached a high of 5.9 percent year over year in May, and dipped to a low of 0.1 percent in July.
Purchased Service Expense per Adjusted Discharge had more mixed results, falling below 2018 levels for five months, and rising above 2018 levels the other seven months. The overall trend-line for Purchased Service Expense per Adjusted Discharge shows a steady increase year over year throughout 2019.
©2018 Kaufman, Hall & Associates, LLC
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