Report on Mass. hospital finances 2022 highlight cost of temporary staffing - Boston Business Journal

DATE: September 29, 2023

The cost of temporary staffing at Massachusetts hospitals doubled in 2022, according to a new state report, leading to a significant drop in the profitability of local hospitals.

“CHIA’s latest report confirms an unfortunate reality: 2022 was the most devastating year for hospital finances in recent memory, and those challenges are continuing well into 2023," said Daniel McHale, vice president of Healthcare Finance & Policy at the Massachusetts Health and Hospital Association, in a statement.

Temporary staffing, which hospitals pointed to as a problem throughout the pandemic, cost $1.5 billion in 2022, more than double the amount of the prior year, according to the report from the Center for Health Information and Analysis. That's up five-fold from 2019, the year before the pandemic, according to the report.

The report looked at 61 acute care hospitals and 47 physician organizations.

McHale added that the cost of temporary labor "represents the biggest and most unsustainable cost pressure for providers everywhere in the commonwealth."

Overall, there was a nearly 9% increase in aggregate expenses at hospitals, CHIA reported. Expenses exceeded operating revenue by $460 million overall.

On average, hospital profitability for fiscal 2022 fell to negative 4.2%, down 9.2 percentage points compared to the prior year. Similarly, the average statewide hospital operating margin also dropped more than 2%, to negative 1.3%, in fiscal 2022.

CHIA’s hospital financial performance report that looks at the profitability, liquidity, and solvency of Massachusetts health systems their affiliated acute hospitals and physician organizations. 

Dr. Helen Boucher, chief of Infectious Diseases at Tufts Medical Center, is vaccinated by RN Morgan Giarusso during the Covid-19 pandemic.

McHale said that the healthcare industry is "still fighting to re-stabilize." MHA pointed to more recent CHIA data, which found that temporary staffing costs were $886.5 million through Q3 at 47 hospitals.

“It is essential that these challenges remain front-and-center as our state engages in important discussions on the future of healthcare policy, workforce, and costs," McHale said.

Hospitals have started to bounce back this year. Latest data, according to CHIA, shows a statewide median operating margin of 0.2% as of June 30, up 1.6% from the prior year.

Lora Pellegrini, president and CEO of the Massachusetts Association of Health Plans, agreed that the pandemic had “significant impact on hospitals and our health care system,” and that the same pressures are facing the employer community.

“Fortunately, data through the third quarter of FY2023 offers a more positive picture,” Pellegrini said. “As our health care system emerges from the volatility brought on by the Covid-19 pandemic, it will be important for our state agencies to continue to review and analyze these trends to support efforts to rein in health care spending and make healthcare more affordable for employers and consumers.” 

Bu Cassie McGrath / Boston Business Journal / September 29, 2023