Cost Realities Facing Hospitals and Health Systems in 2024

**Hospitals and Health Systems Struggle Financially Amid Rising Costs**

Hospitals and health systems across the nation are facing a financial crisis as they grapple with increasing costs and inadequate reimbursements. A recent report has shed light on the challenges these institutions are facing, painting a grim picture of the current state of affairs.

**Financial Instability and Rising Costs**

The report highlights the major transformation that hospitals and health systems are undergoing, with a surge in demand for higher acuity care and deepening financial instability. Workforce shortages, supply chain disruptions, and inflation have collectively driven up costs for hospitals, making it increasingly difficult for them to operate sustainably.

**Financial Uncertainty**

Despite some stabilization in hospital finances in 2023, many hospitals are still operating on thin margins. The report reveals that over half of hospitals closed out the previous year operating at a loss, with persistent workforce shortages and inflation exacerbating the financial challenges.

**Labor Costs and Administrative Burden**

Labor costs, which make up a significant portion of hospitals’ expenses, have been on the rise. Hospitals are also facing an increasing administrative burden due to practices by commercial health insurers that delay care and increase costs. Prior authorization requirements and claims denials have added to hospitals’ financial woes, diverting resources away from patient care.

**Drug Expenses and Supply Costs**

The report also highlights the escalating drug expenses faced by hospitals, with drug shortages further straining their budgets. Additionally, hospitals are spending significant amounts on medical supplies, devices, and equipment, which are essential for delivering quality care but come at a high cost.

**Looking Ahead**

As hospitals navigate the challenges of 2024, they are bracing for further financial strain. Credit ratings agencies have issued negative outlooks for many hospitals, signaling a tough road ahead. With ongoing threats such as Medicaid redeterminations, potential Medicare payment cuts, cybersecurity risks, and escalating hospital violence, hospitals are facing an uphill battle to maintain financial stability.

**Call to Action**

The report calls for urgent policy interventions to support hospitals and health systems in their mission to provide quality care. Measures such as rejecting Medicare and Medicaid cuts, strengthening the healthcare workforce, protecting drug pricing programs, and enhancing cybersecurity are essential to ensure hospitals can continue to serve their communities effectively.

In conclusion, the report paints a stark picture of the financial challenges facing hospitals and health systems, underscoring the urgent need for support and intervention to safeguard the future of healthcare delivery in the United States.