Drastic Increase in Hospital Labor Costs During the COVID-19 Pandemic Leads to Sustained Financial Loss for an Academic Vascular Surgery Division
Clayton J Brinster, G. Thomas Escousse, Philip A Rivera, Hernan Bazan, Ross Parkerson, Charles Leithead, Samuel R Money, W.C. Sternbergh, III
Ochsner Health, New Orleans, LA
Objectives: The financial impact of the COVID-19 pandemic has fundamentally changed the healthcare environment, with hospitals expected to lose billions in 2021. A pre-existing nationwide nursing shortage has drastically worsened during the pandemic, causing a dramatic increase in labor costs and further straining an economically fragile U.S healthcare system. While the Medicare Coronavirus Aid, Relief, and Economic Security (CARES) Act allocated over $350 billion dollars for distribution in ongoing phases, funds have not been specifically assigned to increased labor costs amid nursing shortages. We sought to examine the evolution and financial impact of these changes during repeated pandemic surges within a vascular surgery division at a tertiary center.
Methods: Operating room, inpatient unit, and outpatient clinic financial data were examined retrospectively. Monthly averages from a 14-month control cohort, January 2019-February 2020 (Pre-COVID), were compared to five interval groups of sequential, three-month cohorts from March 2020 through May 2021 (Groups 1-5). Fiscal impact was analyzed from real revenue and cost data derived from actual hospital accounting records, not Medicare estimates or hospital administration projections.
Results: Monthly RVU generation rebounded to and exceeded the pre-pandemic mean (2520) after an isolated drop in the early pandemic (Group 1, 1734), with values ranging from 2540 to 2863/month in Groups 2-5 after government restrictions on elective cases were eased in May 2020. Contribution to indirect (CTI), or profit, showed a similar initial pattern, with a drastic drop in Group 1 followed by a swift rebound (Group 2). Despite increased RVU, there was a severe decline in vascular CTI, inpatient, and outpatient margins as the pandemic progressed through several phases (Groups 3-5), with concomitant, sharp increases in nursing costs (Table 1, Figure 1). Nursing labor expenses are broken down on a per-case and per-patient-day basis, demonstrating sustained and severe increases through May 2021. Outpatient clinic margins show a particularly concerning trend, with decreases of 276% and 281% in Groups 4 and 5, respectively, compared to pre-COVID figures. System-wide, agency-related nursing costs have increased from $4.9 to $13.6 million/month (+178%) in 2021 compared to 2020.
Conclusions: Our results demonstrate a progressive, drastic increase in nursing labor costs during the pandemic, with a resultant, sustained erosion of financial margins despite a level of clinical productivity, as measured in RVU, that exceeds pre-pandemic standards. To our knowledge, this report is the first detailed analysis of this phenomenon and its impact on a surgical division. The unique access to and utilization of actual hospital accounting figures instead of Medicare estimates or hospital administration projections increases the accuracy and generalizability of the examined data. Clearly this precarious national trend is not sustainable, and correction will require significant, targeted funding from future phases of the CARES Act and other federal relief packages.
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