View all newsletters
Receive our newsletter - data, insights and analysis delivered to you
  1. Comment
June 2, 2022updated 01 Jun 2022 12:01pm

Rising healthcare costs threaten hospital wellbeing

The Covid-19 pandemic has not just been a threat to public wellbeing, but to the continuation of the healthcare field as a whole.

By GlobalData Healthcare

Covid-19 has resulted in a multi-pronged attack against the hospital system and is threatening to cause lasting damage to our ability to care for our sickest and neediest. Not only is the health of the patients at risk, but it has hurt the morale and numbers of the healthcare worker population as many are burning out and leaving, as well as the financial health of hospitals. This has put pressure on our healthcare system as it is targeting multiple pain points of an industry that was already slow to adapt to change. What this means is that there is a worrying trend of hospitals becoming less financially solvent; if urgent changes to policy and reimbursement are not made, many hospitals could close for good.

The Covid-19 pandemic has not just been a threat to the wellbeing of our populace, but to the continuation of the healthcare field as a whole. Due to the unexpected financial strain caused by the Covid-19 pandemic, hospitals are seeing their profit margins plummet, many times into the negatives. One of the major causes of this has been inflation. As the pandemic years have seen record inflation, many businesses have had to bear the costs of their materials shooting up. For example, for most hospitals, drug costs alone have risen by 36.9%. James Spencer, data scientist at GlobalData, comments: “Our healthcare industry is in dire need of financial help or a policy restructure to allow it the financial freedom to nimbly and precisely respond to our needs as a society without collapsing under its own financial overhead.”

Not only is the health of healthcare workers at risk from this highly infectious virus, but patients need more intense and longer-lasting care than previously. This longer, more intense care, coupled with a huge increase in patient burden, has caused burnout in a huge amount of the healthcare workforce. A February 2022 survey found that 50% of healthcare workers are burned out, while 25% are thinking of leaving the healthcare field soon. This means that Covid-19 is attacking the physical health, worker populations and financial health of the healthcare system.

The beginning of the pandemic resulted in a large influx of patients who required, on average, 9.9% more inpatient time than the previous average. The hospital system responded to this by expanding treatment and care capacity through hiring much more staff and purchasing infrastructure and tools as needed. As most full-time staff were already at capacity throughout the medical field, the healthcare industry had to rely on third-party staffing agencies to provide contract and travelling nurses to fill the gap. Staffing agencies, however, took this chance to raise their hourly wage for all contracted labour, increasing their personal profit margins from about 15% to a staggering 65%.

These staffing agencies were able to announce a growth of more than $1bn, without passing most, if any, of that money on to the nurses actually being contracted. As staffing salaries are already one of the biggest expenditures a hospital experiences, this double whammy has pushed many hospitals into the red. This all resulted in an average overall increase in expenditure of around 20% compared to 2019’s pre-pandemic era.

Related Companies

Related Report
NEWSLETTER Sign up Tick the boxes of the newsletters you would like to receive. The top stories of the day delivered to you every weekday. A weekly roundup of the latest news and analysis, sent every Friday. The medical device industry's most comprehensive news and information delivered every month.
I consent to GlobalData UK Limited collecting my details provided via this form in accordance with the Privacy Policy
SUBSCRIBED

THANK YOU

Thank you for subscribing to Medical Device Network