June 2018
Expense
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Expense by Region ?
Across the United States, nearly all regions demonstrated a decrease in total expense per adjusted discharge, with the Midwest being the exception (not shown). Interestingly, the Midwest also experienced the greatest decrease in LOS, and the extent to which its expenses fell under budget was greater than in any other region. When looking together at labor and non-labor expense per adjusted discharge, all regions posted a decline over the previous month, with Great Plains and Midwest regions experiencing the largest decline in expenses over last month being primarily driven by decreases on the labor side. The Midwest and Great Plains experienced the largest declines in FTEs per AOB year-over-year, while the West experienced a 2 percent increase.
Labor
Non-Labor
Supply
Drug
Purchased Service
FTE/AOB
Labor Expense
Non-Labor Expense
Supply Expense
Drug Expense
Purchased Service Expense
FTE per AOB
National Expense Observations
With regard to expenses, May was a good month, as national medians for expense per adjusted discharge decreased by 1.8 percent from this time last year and decreased month-over-month by nearly 5 percent. Decreased LOS largely contributed to reduced expenses. Average LOS decreased by nearly 3 percent, prompting organizations to flex where appropriate. Given this trend, hospitals need to maintain vigilance when monitoring cost on a volume-adjusted basis. Labor expense followed a similar trend: Nationally and among most bed sizes and regions, labor expense decreased compared with last year’s performance. FTEs per adjusted occupied bed (FTEs per AOB) also declined nationally by 2 percent. If wage pressures heat up, further improvements in workforce productivity will be critical.
Budget Variance
Month Over Month
Year Over Year
Year Over Year Distributions
(Click to enlarge)
Total Expense per Adj. Discharge
(2.3%)
(4.9%)
(1.8%)
Labor Expense per Adj. Discharge
(6.5%)
(7.3%)
(4.9%)
FTEs per AOB
(1.2%)
(1.2%)
(2.2%)
Non-Labor Exp per Adj. Discharge
0.4%
(3.7%)
(0.3%)
Supply Expense per Adj. Discharge
(1.4%)
3.7%
1.9%
Drug Expense per Adj. Discharge
(8.2%)
2.1%
(3.7%)
Purchased Service Exp per Adj. Discharge
0.2%
(4.0%)
(13.0%)
Unless noted, figures are Actuals and Medians
By Region
By Bed Size
National Observations
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Expense by Bed Size
Although nationally total expenses per adjusted discharge decreased, bed size appears to be a determining factor in performance during the month of May. Large hospitals—those with more than 200 beds—demonstrated an increase in total expense year-over-year being primarily driven by non-labor expense, but total expense remained slightly below budget. Smaller hospitals, on the other hand, saw their costs decrease since last year, as the impact of decreased ALOS had a greater impact on both labor and non-labor expense than for larger hospitals. Purchased services was the primary driver behind non-labor expense decline month-over-month and year-over-year. Volume adjusted non-labor expenses increased for all hospitals with the exception of those between 26-199 beds. Meanwhile, FTEs per AOB declined across all hospital sizes.
Labor
Non-Labor
Supply
Drug
Purchased Service
FTE/AOB
Labor Expense
Non-Labor Expense
Supply Expense
Drug Expense
Purchased Service Expense
FTE per AOB
By Region
By Bed Size
National Observations
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©2018 Kaufman, Hall & Associates, LLC
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