Hospitals will face difficulties climbing back to pre-pandemic margins because of higher labor costs driven by nursing shortages, according to a labor force report Moody's Investors Services released Monday.
Burnout and dissatisfaction with working conditions have pushed many nurses away from hospitals, either into other types of nursing or out of the profession entirely, and strained hospitals' ability to offer a full array of services. This exodus of healthcare workers mirrors a broader economic trend of workers leaving jobs or refusing new employment because of low pay and other factors.
The nurse shortage will only continue, and will "erode financial performance for both not-for-profit and for-profit hospitals into 2022," according to the Moody's report.
Data about hospitals' cash flow margins for this year aren't yet available, but the figures from last year offer a glimpse into the present and the near future. Not-for-profit hospitals saw operating cash flow margins fall from 8.3% in 2019 to 7% in 2020 That negative trend will continue, Moody's projects.
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"These labor shortages are driving up costs for hospitals and hospital systems and forcing some to limit how often they perform more lucrative elective procedures, resulting in lost revenue," the Moody's report says. "Rising costs will make it difficult for hospitals to rebuild margins to pre-COVID levels."
During the roughest stretches of the coronavirus pandemic, many hospitals opted to temporarily halt elective procedures, but it wasn't just COVID-19 caseloads that led to that drastic step. Not having enough nurses on hand to assist with surgeries also contributed.
That's what happened at Novant Health, a 15-hospital not-for-profit system based in Winston-Salem, North Carolina, said Chief Nursing Officer Denise Mihal. The company has since responded with a number of initiatives to shore up its workforce but these efforts have had a limited effect, she said.
"While we have existing and new incentives in place to recruit and retain medical professionals, the reality is that hospitals simply cannot compete with the high rate hikes and sign-on bonuses that national nurse-staffing agencies are using to attract traveling nurses," Mihal said.