July 2020
Expense
Expense by Region *
Hospitals in all five regions saw increases in Total Expense per Adjusted Discharge both year-over-year and compared to budget, with the Midwest seeing the greatest increases of 20% and 13%, respectively. Hospitals in the South increased 5% year-over-year and were 6% above budget.
Labor Expense per Adjusted Discharge increased year-over-year and compared to budget across all regions. Hospitals in the Midwest again saw the greatest year-over-year increases at 19%, but hospitals in the West saw the greatest increase to budget at more than 17%.

Hospitals in the Midwest, West, and Northeast/Mid-Atlantic all were above budget and saw slight year-over-year increases in FTEs per AOB of less than 5%. Hospitals in the South, however, were down 3% year-over-year and 5% below budget, while hospitals in the Great Plains were essentially in line with 2019 performance but 5% below budget for this metric.
Labor Expense
Non-Labor Expense
Supply Expense
Drug Expense
Purchased Service Expense
FTE per AOB
Non-Labor Expense per Adjusted Discharge was up year-over-year and compared to budget in all regions. The Midwest once again saw the most significant increases, up 23% compared to the same period last year and 15% above budget.
Supply Expense per Adjusted Discharge was up year-over-year and compared to budget for all regions. The West had the greatest year-over-year increases. While the Great Plains had the lowest year-over-year increase of just 5%, it had a variance to budget at 11%.
Drug Expense per Adjusted Discharge rose 15%-22% year-over-year for hospitals in the Midwest, Northeast/Mid-Atlantic, and West, and all three regions were above budget for this metric in June. Hospitals in the Great Plains and South saw year-over-year increases of 7% and 9%, respectively, and were both above budget.
Purchased Service Expense per Adjusted Discharge increased year-over-year and compared to budget in all regions. The Great Plains saw Purchased Service Expenses increase the least compared to the same period last year but still rose 14% above budget expectations.
National Expense Observations
Hospitals nationwide again saw mixed performance on expenses in June. While actual expenses increased slightly year-over-year, with the continued help of aggressive efforts to manage costs, expenses remained well below budget and up just slightly on a per-unit basis.

Total Expenses rose 1% year-over-year and less than 3% month-over-month. Total Expenses were 3% below budget. Total Labor Expense increased slightly compared to June 2019, but fell 1% from May 2020 and 4% below budget as labor cost cutting measures continue to be in place in many hospitals. Meanwhile, Total Non-Labor Expense increased month-over-month by about 6%, but increased only 1% year-over-year and remained 3% below budget as volumes continued to return.
Supply Expense saw the greatest month-over-month increase at 21%, but still fell 2.5% below budget. Drug Expense rose 13.5% from May 2020 and 1% from last year, but was down 7% from budget, while Purchased Service Expense was up 3% month-over-month, and about 1% year-over-year while remaining 2% below budget.
Looking at expenses adjusted for volumes, Total Expense per Adjusted Discharge rose 11% from June 2019 and 11% above budget, but fell 13% compared to prior month. Labor Expense per Adjusted Discharge increased 11% year-over-year and 8% above budget, but fell 16% compared to May 2020. Full-Time Equivalents (FTEs) per Adjusted Occupied Bed (AOB) rose 1% year-over-year, but declined 12% month-over-month and was less than 1% below budget.
Non-Labor Expense per Adjusted Discharge rose about 11% both year-over-year and to budget, but was down 9% month-over-month. Supply Expense per Adjusted Discharge saw the greatest year-over-year increase at 15%, and was up 5% month-over-month and 10% above budget as hospitals continued to procure supplies for the treatment and safety of patients and staff.
Drug Expense per Adjusted Discharge also was up significantly year-over-year at 15% and was 8% above budget, but remained flat month-over-month. Purchased Service Expense per Adjusted Discharge rose 10% both year-over-year and compared to budget, but declined 11% compared to May 2020.
Unless noted, figures are Actuals and Medians
Budget Variance
Month Over Month
Year Over Year
Year Over Year Distributions
(Click to enlarge)
Total Expense
(3.0%)
2.8%
0.9%
total_expense.svg
Total Labor Expense
(3.6%)
(1.1%)
1.1%
total_labor_expense.svg
Total Non-Labor Expense
(2.6%)
5.8%
1.1%
total_non_labor_expense.svg
Supply Expense
(2.4%)
21.0%
2.5%
supply_expense.svg
Drugs Expense
(7.1%)
13.5%
0.7%
drugs_expense.svg
Purchased Service Expense
(1.9%)
3.1%
0.9%
purchased_service_expense.svg
Total Expense per Adjusted Discharge
11.3%
(12.6%)
11.5%
total_expense_per_adj_discharge.svg
Labor Expense per Adjusted Discharge
8.5%
(15.5%)
11.6%
labor_expense_per_adj_discharge.svg
FTEs per AOB
(0.7%)
(11.6%)
1.5%
ftes_per_aob.svg
Non-Labor Expense per Adj. Discharge
11.8%
(9.0%)
11.4%
non_labor_expense_per_adj_discharge.svg
Supply Expense per Adjusted Discharge
10.2%
4.9%
14.9%
supply_expense_per_adj_discharge.svg
Drug Expense per Adjusted Discharge
8.4%
0.0%
14.9%
drug_expense_per_adj_discharge.svg
Purchased Service Expense per Adjusted Discharge
9.6%
(11.5%)
10.6%
purchased_service_expense_per_adj_discharge.svg
Expense by Bed Size
Hospitals in all bed-size cohorts saw Total Expense per Adjusted Discharge increase both year-over-year and compared to budget in June. Hospitals with 100-199 beds saw the biggest increases year-over-year at 20%. The smallest hospitals of 0-99 beds were up just 5% year-over-year, and were the cohorts closest to budget for this metric.
Labor Expense per Adjusted Discharge followed a similar pattern, with all bed-size cohorts seeing increases both year-over-year and to budget. Smaller hospitals again had the lowest increased year-over-year and relative to budget.
FTEs per AOB were up 1-6% year-over year for hospitals with 100-199, 200-299, 300-499, and 500 beds or more. Smaller hospitals with 0-99 beds fell across both measures, down approximately 2-4% year-over-year and 4% compared to budget.
Labor Expense
Non-Labor Expense
Supply Expense
Drug Expense
Purchased Service Expense
FTE per AOB
All bed-size cohorts were up year-over-year and above budget for Non-Labor Expense per Adjusted Discharge, with hospitals with 100-199 beds seeing the biggest year-over-year increase at 20%. Hospitals with the smallest bed sizes rose the least year-over-year and were closest to budget.
Supply Expense per Adjusted Discharge was above budget and rose 12-16% year-over-year in five of six bed-size cohorts. The smallest hospitals of 0-25 beds were the exception, with Supply Expense per Adjusted Discharge falling 4% year-over-year and 5% above budget in June.
Drug Expense per Adjusted Discharge rose year-over-year for hospitals of all sizes, but were above budget in all cohorts except hospitals of bed sizes 26-99. The largest hospitals of 500 beds or more saw the biggest increases, jumping 26% year-over-year and 23% above budget.
Hospitals of all sizes also saw year-over-year increases in Purchased Service Expense per Adjusted Discharge. All cohorts were above budget for this metric with the exception of hospitals with 26-99 beds. Hospitals with 100-199 beds saw the greatest year-over-year increase at 18% for Purchased Service Expense per Adjusted Discharge, while hospitals with greater than 500 beds saw the greatest variance to budget at 15%.
©2020 Kaufman, Hall & Associates, LLC
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