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February 2020
Expense
Expense by Region *
Total Expense per Adjusted Discharge rose year over year for hospitals in the South, West, and Northeast/Mid-Atlantic, with the Northeast/Mid-Atlantic seeing the largest increase at 4.0 percent, up 1.0 percent compared to budget. Hospitals in the Great Plains and Midwest both saw slight year-over-year decreases in Total Expense per Adjusted Discharge of -0.3 percent and -0.6 percent, respectively.
Labor Expense per Adjusted Discharge rose year over year and was above budget in the South and Northeast/Mid-Atlantic, and rose year over year but fell below budget in the West. Hospitals in the Great Plains and Midwest both saw year-over-year decreases in Labor Expense per Adjusted Discharge, with the Great Plains experiencing the biggest decline of -4.2 percent.
Labor Expense
Non-Labor Expense
Supply Expense
Drug Expense
Purchased Service Expense
FTE per AOB
FTEs per AOB fell year over year and were below budget in four of the five regions. The Great Plains again had the biggest decrease, down -9.2 percent year over year and -17.3 percent to budget. The Northeast/Mid-Atlantic was essentially flat at 0.1 percent year over year for FTEs per AOB, but was up 3.3 percent to budget.
Non-Labor Expense per Adjusted Discharge increased year over year across all regions, but saw mixed performance to budget. The Great Plains had the biggest year-over-year increase in these expenses at 4.5 percent, but also fell lowest to budget at -3.9 percent. The West also was below budget, while the Northeast/Mid-Atlantic, South, and Midwest all were above budget for Non-Labor Expense per Adjusted Discharge.
Most regions saw year-over-year increases in Supply Expense per Adjusted Discharge, ranging from 0.5 percent in the South to 6.1 percent in the Midwest. The Northeast/Mid-Atlantic was the only region to see a slight drop in Supply Expense per Adjusted Discharge of -0.6 percent, just 0.2 percent above budget expectations.
Drug Expense per Adjusted Discharge was above January 2019 levels in the West, Midwest, Northeast/Mid-Atlantic, and Great Plains. The South was the only region to see a year-over-year drop of -0.8 percent for this metric, falling -5.7 percent below budget.
Purchased Service Expense per Adjusted Discharge was up year over year and compared to budget in the Great Plains and Midwest, and down year over year and compared to budget in the South and West. The Northeast/Mid-Atlantic saw Purchased Service Expense per Adjusted Discharge increase 2.4 percent year over year, but fall -5.1 percent below budget.
National Expense Observations
Hospitals nationwide saw increases year over year across most expense metrics in January, but across-the-board decreases month over month. Total Expense per Adjusted Discharge rose slightly 0.6 percent year over year and was 1.4 percent above budget, but decreased -1.5 percent month over month.
Labor Expense per Adjusted Discharge was up 1.3 percent compared to January 2019 and 1.8 percent to budget, but down -0.3 percent month over month. Full-Time Equivalents (FTEs) per Adjusted Occupied Bed (AOB) was the only metric to see a year-over-year decline at -3.0 percent, also falling -4.0 percent month over month and -2.6 percent to budget.
Non-Labor Expense per Adjusted Discharge rose 1.1 percent year over year and 1.3 percent to budget, and dipped -0.8 percent month over month. Supply Expense per Adjusted Discharge rose 1.8 percent year over year and 0.4 percent to budget, but was down -2.7 percent month over month. Drug Expense per Adjusted Discharge saw the biggest year-over-year increase at 2.3 percent, but was down -3.8 percent to budget and -3.3 percent month over month. Purchased Service Expense per Adjusted Discharge was up 1.4 percent year over year and 1.0 percent to budget, and down -1.2 percent month over month.
Unless noted, figures are Actuals and Medians
Budget Variance
Month Over Month
Year Over Year
Year Over Year Distributions
(Click to enlarge)
Total Expense per Adj. Discharge
1.4%
(1.5%)
0.6%
Labor Expense per Adj. Discharge
1.8%
(0.3%)
1.3%
FTEs per AOB
(2.6%)
(4.0%)
(3.0%)
Non-Labor Exp per Adj. Discharge
1.3%
(0.8%)
1.1%
Supply Expense per Adj. Discharge
0.4%
(2.7%)
1.8%
Drug Expense per Adj. Discharge
(3.8%)
(3.3%)
2.3%
Purchased Service Exp per Adj. Discharge
1.0%
(1.2%)
1.4%
Expense by Bed Size
Total Expense per Adjusted Discharge increased year-over-year for five of the six bed-size cohorts in January. Hospitals with 200-299 beds saw the biggest increase at 3.3 percent. The smallest hospitals of 0-25 beds was the only cohort to see a year-over-year decrease at -0.8 percent.
Labor Expense per Adjusted Discharge was up across all bed-size cohorts for the month, with increases ranging from 0.9 percent for hospitals with 500 beds or more, to 2.1 percent for hospitals with 100-199 beds.

FTEs per AOB fell year over year for most bed-size cohorts. Hospitals with 200-299 beds were up 2.3 percent year over year and -1.4 percent to budget, while the largest hospitals of 500 beds or more were up just 0.1 percent year over year and in line with budget expectations.
Labor Expense
Non-Labor Expense
Supply Expense
Drug Expense
Purchased Service Expense
FTE per AOB
Non-Labor Expense per Adjusted Discharge increased year over year for five of the six bed-size cohorts, with 200-299 bed hospitals seeing the biggest jump at 3.6 percent year over year and 4.1 percent to budget. Smaller hospitals with 26-99 beds were the only cohort to see a slight year-over-year drop in Non-Labor Expense per Adjusted Discharge at -0.1 percent, falling -5.0 percent to budget.
Supply Expense per Adjusted Discharge also increased year over year for five of the cohorts. Hospitals with 26-99 beds again were the outlier, with these expenses down -2.6 percent year over year and -8.6 percent below budget.
Drug Expense per Adjusted Discharge rose above January 2019 levels but fell below budget for cohorts with 100-499 beds. Hospitals with 26-99 beds were down -1.4 percent year over year and -15.9 percent to budget for this metric, while the nation’s smallest (0-25 beds) and largest (500 beds or more) hospitals both were down year over year, but above budget.
Purchased Service Expense per Adjusted Discharge increased for hospitals in four of the six bed-size cohorts, with 200-299 bed hospitals seeing the biggest jump at 11.9 percent year over year and 3.9 percent to budget. The smallest hospital cohorts of 0-25 and 26-99 beds both saw Purchased Service Expense per Adjusted Discharge drop year over year and compared to budget.
©2020 Kaufman, Hall & Associates, LLC
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