Kaufman Hall: Hospitals’ Agency Nurse Costs Explode

The Kaufman Hall consulting firm has done an analysis that finds labor costs growing rapidly, and agency/traveling nurse costs exploding, right now, causing huge financial headaches for hospitals. The results of a survey just released by the Chicago-based Kaufman Hall consulting firm confirm in statistics what hospital and health system executives already knew anecdotally: one debilitating impact of the COVID-19 pandemic has been the explosion in hospital labor costs, most especially in the costs of having to engage agency/traveling nurses, which have more than doubled.

As a May 11 press release from Kaufman Hall begins, “A nationwide shortage of healthcare workers made worse by the pandemic, and hospital and health systems’ increased reliance on contract labor, is driving expenses upward and contributing to steep declines in profit margins, according to a new analysis by healthcare consulting firm Kaufman Hall. Labor expenses at U.S. hospitals and health systems increased 37% per patient between 2019 and March 2022 ($4,009 to $5,494 per adjusted discharge). The spike in costs was largely attributable to increased contract labor expenses during the same period, rising from just 2% of total labor expenses in 2019 to 11% in 2022.”