Increasing Costs Force Hospitals to Reduce Staff and Some Services

Bozeman Health, a network of hospitals and clinics in southwest Montana, had an issue, which, according to system administrators, had been brewing for months.

It had survived the worst of what the covid-19 pandemic could throw at it, but it had lost personnel and had to pay more to get temporary workers to fill the hole. Due to inflation, running costs had also increased.

The system was losing money despite serving one of the state's wealthiest and fastest-growing regions. President and CEO John Hill disclosed that from the beginning of the year until the middle of June, the company spent almost $15 million more than it earned. Hill said on August 2 that Bozeman Health had fired 28 executives and will not be filling 25 further executive positions. About 2,400 people are employed by the system, which operates on an annual budget of about $450 million.

In large, rural areas like Montana, where there are few options to replace workers who leave, the epidemic has exacerbated a preexisting shortage of health care professionals. Overtime pay for nurses and other hospital staff, as well as expensive solutions like traveling nurses, drove up hospital expenditures. Patients have had to wait longer for treatment or have had fewer providers to care for them due to staffing shortages.

Healthcare facilities in many states, including California, Mississippi, New York, Oregon, and others, joined Montana in reducing staff and services this summer. Fewer surgeries, higher equipment costs, sicker patients, and dwindling investments are all problems that health systems have highlighted. Payroll, the hospital's main expense, has also increased sharply alongside these issues.

According to Akin Demehin, senior director of quality and patient safety policy at the American Hospital Association, if you chat with just about any hospital executive throughout the country, they would list workforce as their top one, two, and three objectives.

During the epidemic, many people who worked in healthcare quit because to low wages and job stress. Hospitals around the country scrambled to fill the hole with contract staff, driving up their pay. Thus, hospitals were put in an uncomfortable position of trying to retain current staff while also recruiting new people to fill critical positions while reducing expenses.

During the fall of last year, the Bozeman Health system spent $1.2 million per week on temporary staff, up from less than $100,000 per month before the pandemic. It's getting closer to $1.4 million a month now. Labor expenses in the system total around $20 million every month, up about 12 percent from the same period last year.

Hill stated that the health system had halted all out-of-state business travel, reduced CEO remuneration, and reorganized workloads before laying off employees. It raised the minimum wage in an effort to keep its current employees and to encourage contract workers to become permanent ones. Hill said that while progress in the healthcare system is gradual, it has been achieved. The company had 487 open positions for necessary employees as of mid-August.

What we've done so far has not been enough, Hill remarked.

According to Vicky Byrd, RN, CEO of the Montana Nurses Association, nurses across the country are being pushed to accomplish more with less support due to staffing shortages. Some of the incentives utilized for recruitment are things like extra compensation for nurses who work overtime or retirement bonuses for long-term staff, and she thinks more hospitals should do this.

Byrd argued that the $20,000 sign-on bonuses were not merely for recruiting. But what are you going to do to keep them there over the next ten to twenty years?

Financial difficulties for hospitals have changed since the beginning of the pandemic, when they were primarily worried with covid response costs and income lost due to people delaying additional care. Many of the nation's affluent hospitals turned a profit in 2020 thanks to federal funding and a return to more typical service levels.

However, the hospital administration claims that the financial outlook changed early in 2022. The omicron increase, along with growing prices and personnel issues, had a significant impact on several institutions.

Industry executives have reported a decline in the millions of dollars in government help hospitals got during the pandemic. In 2020, the federal government provided Bozeman Health with almost $20 million. Last year, it received $2.5 million, and in 2022, it is expected to collect around $100,000.

Some hospitals may be losing money, according to health economist and senior fellow at USC's Schaeffer Center for Health Policy and Economics John Romley, who blames the decline in federal funding and the acceleration of inflation. He did, however, stress that additional information is required to assess how hospitals generally fared in comparison to prior years.

For the first three months of 2018, Providence, a health system with 52 hospitals across the West, reported a net operating deficit of $510 million. As of this past July, Providence has a "leaner executive team" in place. Providence St. Patrick Hospital in Missoula is one of the major medical facilities in the state of Montana, and it is operated by the system.

Providence Montana's COO Kirk Bodlovic said the new organizational structure hasn't yet had an impact on local positions, but that hospital administrators are reviewing available positions that aren't directly related to patient care. He explained that the facility was making an effort to hire fewer temporary staff members.

It's clear that recruitment efforts are not keeping up with the demand, as Bodlovic put it.

Some medical staff who stayed on the job during the panic of the pandemic have been forced out by hospital layoffs around the country. And because of the reductions, some patients have had to drive further to get the care they need.

Bay Area Hospital received criticism after saying it would lay off 56 temporary workers and discontinue inpatient mental health services in Coos Bay, Oregon. The significant cost of finding and hiring new employees was noted by hospital administrators.

The Bend, Oregon-based St. Charles Health System fired off 105 employees in May and filled 76 open positions. In a press release, then-CEO Joe Sluka blamed the necessity to hire contract clinical personnel for the system's "skyrocketing" labor expenses. According to him, the hospital lost $21.8 million in April.

It took two years of the pandemic to bring us into this predicament, and it will take at least two years to recover, Sluka said in the announcement.

Since Bozeman Health's main hospital in Montana has been unable to provide inpatient dialysis for several months, patients in need of this treatment have been referred elsewhere. Hill has stated that ancillary services, such as laboratory testing, might anticipate to see delays. A break-even point for the system, according to Ludford, is expected to be reached in the second part of this year.

Shodair Children's Hospital in Helena, located around 100 miles away, had to cut in half the number of patients it took due to a lack of staff. To accommodate growing demand, this hospital is building a new, state-of-the-art facility costing $66 million; it is the only inpatient psychiatric hospital for children in Montana.

Hospital CEO Craig Aasved claimed that about two years ago, the 74-bed facility reduced staffing rather than hiring contract workers so that they would have room to confine patients in the event of a covid outbreak. Aasved has indicated that he is working feverishly to open a second unit. For a company like Shodair that has never before relied on temporary workers, he claims that four people have been hired in the past several months.

Aasved remarked, It's a double whammy: we lost revenue because we've closed beds, and then you've got the additional expense for travelers on top of that. Although eliminating layoffs and furloughs is a priority, business as usual simply cannot be maintained indefinitely.

He explained that about six months ago, in an effort to recruit new nurses, the hospital launched a residency program for those already working in the field. Yet, those measures haven't produced swift results.

Similarly, St. Peter's Health CEO Wade Johnson revealed that the hospital had reduced service hours and closed a portion of its inpatient unit due to a lack of staff. There are still unused beds available.

Some hospital administrators are considering using iPad-based food ordering systems so that patients no longer need to interact with staff members to place their orders.

The preceding is a summary of an article that originally appeared on Headline Wealth.

Written by Staff Reports

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