August 2020
Expense
Expense by Region *
Hospitals across all regions saw expenses increase year-over-year for Total Expense, Labor Expense, Non-Labor Expense, Supply Expense, and Purchased Service Expense per Adjusted Discharge. The West saw the greatest increases in Total Expense per Adjusted Discharge, up 14% year-over-year and 16% above budget. The Northeast/Mid-Atlantic was the only region to fall below expectations for this metric at 6% below budget, but the region was up 9% year-over-year.
The West again saw the greatest increases for Labor Expense per Adjusted Discharge, up 14% year-over-year and 21% above budget. The South and Midwest also were above budget for this metric, while the Northeast/Mid-Atlantic and Great Plains were below budget. Hospitals in the Northeast/Mid-Atlantic, Midwest, and South all were essentially in line with budget for FTEs per AOB in July. The West was up just 2% year-over-year and 3% above budget, while the Great Plains was an outlier, down 7% year-over-year and 35% below budget.
Labor Expense
Non-Labor Expense
Supply Expense
Drug Expense
Purchased Service Expense
FTE per AOB
The West saw the greatest increases for Non-Labor Expense per Adjusted Discharge, rising 14% year-over-year and 10% above budget. The South and Midwest also were above budget, while the Northeast/Mid-Atlantic and Great Plains were below budget. The West was an outlier for Supply Expense per Adjusted Discharge, jumping 24% year-over-year and 27% above budget. The Northeast/Mid-Atlantic was the only region to fall slightly below budget for this metric at 2% below budget, but was up 4% year-over-year.
Drug Expense per Adjusted Discharge rose about 12% year-over-year in the Great Plains, Midwest, and South, but the Great Plains and Midwest were below budget while the South was above budget. The West was significantly above budget at 46% and was up 36% year-over-year. The Northeast/Mid-Atlantic was flat year-over-year but 10% below budget.
The Midwest saw the greatest increases in Purchased Service Expense per Adjusted Discharge, up 18% year-over-year and 7% above budget. Hospitals in the South and West also were up year-over-year and above budget, while hospitals in the Northeast/Mid-Atlantic and Great Plains were up year-over-year but below budget.
National Expense Observations
Hospitals nationwide saw actual expenses increase slightly year-to-date, year-over-year, and month-over-month in July. Looking first at year-to-date results, Total Expense and Total Non-Labor Expense both are up about 1% and Total Labor Expense is up 2% compared to the same seven-month period in 2019. Total Expenses also rose 1% year-over-year and 2% month-over-month, Total Labor Expense rose 1% year-over-year and 4% month-over-month, and Total Non-Labor Expense rose 2% both year-over-year and month-over-month.
Purchased Service Expense saw the greatest year-over-year increase at 6%, while Drugs Expense saw the greatest month-over-month increase, also at 6%. Total Expense, Total Labor Expense, Total Non-Labor Expense, Drugs Expense, and Purchased Service Expense all fell 1% below budget for the month, while Supply Expense was 1% above budget.
While the year-to-date increases in actual expenses are minimal, they show that expenses are increasing even as hospitals are seeing fewer patients. The higher costs become more evident when expenses are adjusted for continued low volumes.
Total Expense per Adjusted Discharge has jumped 16% year-to-date compared to the same seven-month period in 2019. In July, Total Expense per Adjusted Discharge rose 9% year-over-year and was 5% above budget, but down 3% month-over-month.
Labor Expense per Adjusted Discharge is up 18% year-to-date, and Full-Time Equivalents (FTEs) per Adjusted Occupied Bed (AOB) are up 9% compared to 2019 levels. Labor Expense per Adjusted Discharge also rose 8% year-over-year and was 4% above budget in July, but down 2% month-over-month. FTEs per AOB were essentially flat year-over-year, but down about 1% both month-over-month and compared to budget.
Non-Labor Expense per Adjusted Discharge has increased 15% during the first seven months of 2020 compared to the same period of 2019, with Supply Expense per Adjusted Discharge up 9%, Drug Expense per Adjusted Discharge up 16%, and Purchased Service Expense per Adjusted Discharge up 19%.
Looking at July results, Non-Labor Expense per Adjusted Discharge jumped 11% year-over-year and was 5% above budget, but fell 4% month-over-month. Drug Expense per Adjusted Discharge saw the greatest increases at 14% year-over-year and 4% month-over-month, while Supply Expense per Adjusted Discharge saw the greatest budget variance, jumping 8% above budget.
Unless noted, figures are Actuals and Medians
Budget Variance
Month Over Month
Year Over Year
Year Over Year Distributions
(Click to enlarge)
Total Expense
(1.3%)
2.3%
1.4%
total_expense.svg
Total Labor Expense
(1.2%)
3.9%
1.0%
total_labor_expense.svg
Total Non-Labor Expense
(1.1%)
1.7%
2.3%
total_non_labor_expense.svg
Supply Expense
1.2%
5.5%
3.2%
supply_expense.svg
Drug Expense
(0.9%)
6.1%
4.8%
drugs_expense.svg
Purchased Service Expense
(1.3%)
4.1%
6.0%
purchased_service_expense.svg
Total Expense per Adjusted Discharge
4.7%
(3.0%)
9.4%
total_expense_per_adj_discharge.svg
Labor Expense per Adjusted Discharge
4.1%
(1.7%)
8.3%
labor_expense_per_adj_discharge.svg
FTEs per AOB
(1.0%)
(0.7%)
0.2%
ftes_per_aob.svg
Non-Labor Expense per Adj. Discharge
4.5%
(3.6%)
10.5%
non_labor_expense_per_adj_discharge.svg
Supply Expense per Adjusted Discharge
8.2%
1.4%
11.9%
supply_expense_per_adj_discharge.svg
Drug Expense per Adjusted Discharge
3.5%
3.6%
13.9%
drug_expense_per_adj_discharge.svg
Purchased Service Expense per Adjusted Discharge
4.8%
(0.7%)
10.2%
purchased_service_expense_per_adj_discharge.svg
Expense by Bed Size
Looking at hospitals by size, expenses increased year-over-year across all bed-size cohorts across most metrics: Total Expense, Labor Expense, Non-Labor Expense, Supply Expense, Drug Expense, and Purchased Service Expense per Adjusted Discharge.
For Total Expense per Adjusted Discharge, larger hospitals with 300-499 beds saw the greatest year-over-year increase at 15% and were 7% above budget. Hospitals with 100-199 beds saw the greatest increase to budget at 9% and were up 11% year-over-year.

Labor Expense per Adjusted Discharge followed a similar pattern, with hospitals with 300-499 beds seeing the biggest year-over-year increase at 13%, while hospitals with 100-199 beds had the greatest increase to budget at 9%.
Labor Expense
Non-Labor Expense
Supply Expense
Drug Expense
Purchased Service Expense
FTE per AOB
Hospitals with 26-99 beds were the only ones to fall below budget for both Total Expense and Labor Expense per Adjusted Discharge. FTEs per AOB were up year-over-year and above budget for hospitals with 100-199, 200-299, and 300-499 beds, and down year-over-year and below budget for hospitals with 0-25 and 26-99 beds. The largest hospitals of 500 beds or more saw FTEs per AOB decrease 1% year-over-year but fall close to budget.
Five of six bed-size cohorts were up year-over-year and above budget for Non-Labor Expense per Adjusted Discharge. Larger hospitals with 300-499 beds saw the greatest year-over-year increase at 15%. Hospitals with 26-99 beds were the outlier, falling 2% below budget but up 4% year-over-year.
Results followed a similar pattern for Supply Expense, Drug Expense, and Purchased Service Expense per Adjusted Discharge. Across all three metrics, five of six bed-size cohorts increased both year-over-year and compared to budget, while hospitals with 26-99 beds fell below budget but saw expenses increase year-over-year.
©2020 Kaufman, Hall & Associates, LLC
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