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May 2020
Expense
Expense by Region *
Hospitals across all regions saw adjusted expenses increase both year-over-year and compared to budget for all metrics. The Midwest had the greatest year-over-year increases across all measures, while the Great Plains had the lowest increases for most metrics, with the exceptions of Supply Expense and Purchased Service Expense per Adjusted Discharge.
Year-over-year increases for Total Expense per Adjusted Discharge ranged from 41% for hospitals in the Great Plains to 83% in the Midwest. For Labor Expense per Adjusted Discharge, year-over-year increases ranged from 45% in the Great Plains to 87% in the Midwest. These results correlate with the FTE per AOB year-over-year increases, which ranged from 28% in the Great Plains to 60% in the Midwest.
Labor Expense
Non-Labor Expense
Supply Expense
Drug Expense
Purchased Service Expense
FTE per AOB
Non-Labor Expense per Adjusted Discharge results ranged from 43% year-over-year in the Great Plains to 73% in the Midwest, while Supply Expense per Adjusted Discharge results ranged from 20% year-over-year in the South to 44% in the Midwest. The Great Plains also had the lowest year-over-year increase in Drug Expense per Adjusted Discharge at 40%, while the Midwest had the highest at 96%. For Purchased Service Expense per Adjusted Discharge, year-over-year increases ranged from a low of 61% in the Northeast/Mid-Atlantic to a high of 89% in the Midwest.
National Expense Observations
Hospitals’ per-patient expenses remained high in April relative to the much lower numbers of patients being treated. While total expenses declined slightly, those decreases did not come close to keeping up with steep volume declines. This suggests that hospitals’ efforts to reduce costs through mass furloughs, significant pay cuts for executives, and other cost control measures have been insufficient thus far to make up for lost volumes, but may have a greater impact in future months.
For example, Total Expense per Adjusted Discharge rose 59% both year-over-year and compared to budget. Total Expenses, however, dropped 7% year-over-year and fell 10% below budget. The same pattern can be seen with labor and non-labor expenses. Labor Expense per Adjusted Discharge was up 63% both year-over-year and to budget, while Total Labor Expense fell just 5% compared to April 2019 and was 8% below budget. Full-Time Equivalents (FTEs) per Adjusted Occupied Bed (AOB) rose 44% year-over-year and was 43% above budget.
Non-Labor Expense per Adjusted Discharge rose 58% compared to April 2019 and was 55% above budget, but Total Non-Labor Expense was down 9% year-over-year and 12% below budget. Purchased Service Expense per Adjusted Discharge had the greatest increases of any expense metric, up 81% year-over-year and 72% above budget.
Drug Expense per Adjusted Discharge also saw significant increases, up 62% year-over-year and 60% above budget expectations, while Supply Expense per Adjusted Discharge rose 25% year-over-year and was 24% above budget.
Unless noted, figures are Actuals and Medians
Budget Variance
Month Over Month
Year Over Year
Year Over Year Distributions
(Click to enlarge)
Total Expense
(10.0%)
(9.5%)
(7.4%)
total_expense.svg
Total Labor Expense
(7.5%)
(8.6%)
(4.8%)
total_labor_expense.svg
Total Non-Labor Expense
(12.0%)
(10.7%)
(9.3%)
total_non_labor_expense.svg
Supply Expense
(29.7%)
(27.4%)
(27.3%)
supply_expense.svg
Drugs Expense
(12.9%)
(15.4%)
(10.2%)
drugs_expense.svg
Purchased Service Expense
(3.4%)
(4.6%)
(2.3%)
purchased_service_expense.svg
Total Expense per Adjusted Discharge
58.5%
35.6%
58.5%
total_expense_per_adj_discharge.svg
Labor Expense per Adjusted Discharge
62.6%
36.2%
63.1%
labor_expense_per_adj_discharge.svg
FTEs per AOB
42.8%
25.3%
43.6%
ftes_per_aob.svg
Non-Labor Expense per Adj. Discharge
55.2%
34.8%
58.2%
non_labor_expense_per_adj_discharge.svg
Supply Expense per Adjusted Discharge
24.4%
12.1%
25.3%
supply_expense_per_adj_discharge.svg
Drug Expense per Adjusted Discharge
59.4%
29.8%
61.8%
drug_expense_per_adj_discharge.svg
Purchased Service Expense per Adjusted Discharge
72.2%
44.8%
80.5%
purchased_service_expense_per_adj_discharge.svg
Expense by Bed Size
Adjusted expenses were up both year-over-year and to budget across all metrics for hospitals of all sizes in April. For Total Expense per Adjusted Discharge, year-over-year increases ranged from a low of 35% for the nation’s largest hospitals of 500 beds or more, to a high of 68% for the nation’s smallest hospitals of 0-25 beds.
Labor Expense per Adjusted Discharge ranged from 44% year-over-year for hospitals with 500 beds or more to 71% for hospitals with 200-299 beds. Five of six bed-size cohorts saw FTEs per AOB increase between 35%-47% year-over-year, while hospitals with 0-25 beds had a larger increase at about 57%.
Labor Expense
Non-Labor Expense
Supply Expense
Drug Expense
Purchased Service Expense
FTE per AOB
Non-Labor Expense per Adjusted Discharge rose 35% year-over-year and 44% to budget for the nation’s largest hospitals (500 beds or more), and 67% year-over-year and 55% to budget for the smallest hospitals (0-25 beds).
Supply Expense per Adjusted Discharge increases ranged from 15% year-over-year for hospitals with 100-199 beds, to 48% for hospitals with 0-25 beds. Drug Expense per Adjusted Discharge increases were more clustered, with a low of 52% for 100-199 bed hospitals and a high of 65% for hospitals with 200-299 and 300-499 beds.
Four of five bed-size cohorts saw Purchased Service Expense per Adjusted Discharge jump 81% or more year-over-year. The largest hospitals of 500 beds or more were the only cohort to see a smaller increase for this metric at 60% year-over-year.
©2020 Kaufman, Hall & Associates, LLC
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