Labor costs during pandemic have saddled hospitals
(Bloomberg) — US hospitals are facing another year of rough finances as they cope with sharply higher costs and growing labor tension, Fitch Ratings says.
Fitch has a negative rating on the sector, with a deteriorating outlook, and expects more downgrades than upgrades this year for not-for-profit hospitals with rated debt. The smaller and often-rural facilities that aren’t rated will fare far worse, Kevin Holloran and Mark Pascaris said in a report . There’s not a lot to be optimistic about in the fourth year of a pandemic that pushed hospitals into distress as they shut down profitable procedures and saw expenses, especially labor, soar. The billions in federal aid that buoyed balance sheets has ended, including the $178 billion Provider Relief Fund.“There’s just no more free money coming from the feds and the states,’’ Holloran said during a presentation Wednesday. About three-quarters of hospitals’ expenses are “under intense pressure.’’ Though hospitals are relying less on the travel nurses that filled in for departing and sick nurses during the pandemic, wages for regular staff will be higher for years, he said. Add inflation and higher borrowing costs, and the situation looks even more worrisome. While hospital volumes are rising, “we’re struggling with right now the wrong’ kind of volumes,’’ meaning patients sickened in the so-called tripledemic of Covid, flu and RSV that require more care, instead of elective procedures, Holloran said. But “it’s labor, labor, labor’’ that forms the biggest challenge to hospitals, he said. “The potential for strikes is much more elevated than it used to be.’’
Those tensions have been playing out this week in New York City, where more than 7,000 nurses at two hospitals concluded a three-day strike Thursday that focused on increasing staffing. Nurses say inadequate staffing levels cause them to leave the field, forcing hospitals to pay for more-expensive temporary replacements and ensuring that turnover remains high.
Labor relations will remain “contentious,’’ as will negotiations with insurers as hospitals press for payment increases, Holloran said. “It’s going to be another difficult year.’’
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