July 2020
Expense
Expense by Region *
Hospitals in all regions saw increases both year-over-year and compared to budget for Total Expense, Labor Expense, Non-Labor Expense, Supply Expense, and Purchased Service Expense per Adjusted Discharge. For Total Expense per Adjusted Discharge, the Midwest saw the greatest year-over-year increase at 21% and hospitals in the Northeast/Mid-Atlantic saw the biggest increase to budget at 16%. Hospitals in the South increased 5% year-over-year and were 7% above budget for this metric.
For Labor Expense per Adjusted Discharge, 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 18%. Hospitals in the Midwest, West, and Northeast/Mid-Atlantic all were above budget and saw year-over-year increases in FTEs per AOB of 5% or less. Hospitals in the South were down 2% 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
The Midwest once again saw the most significant year-over-year increase for Non-Labor Expense per Adjusted Discharge at 23% and was 15% above budget, while the Northeast/Mid-Atlantic saw the greatest increase to budget at 18% and was up 17% year-over-year. For Supply Expense per Adjusted Discharge, the West had the greatest increases at 22% year-over-year and 19% above budget. The Great Plains had the lowest year-over-year increase of 7% for this metric, and was 11% above budget.
Drug Expense per Adjusted Discharge rose 17%-27% 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 were up just 1% year-over-year and fell 5% below budget, while hospitals in the South were up 9% year-over-year but essentially in line with budget.

The Midwest again had the greatest increases for Purchased Service Expense per Adjusted Discharge, up 17% both year-over-year and to budget. 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. Actual expenses increased only slightly year-over-year with the continued help of aggressive efforts to manage costs, and remained well below budget.
Total Expense rose 1% year-over-year and less than 3% month-over-month, and was 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 continued at many hospitals. Total Non-Labor Expense increased about 6% month-over-month and 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% below budget. Drugs Expense rose 14% from May 2020 and 1% from June 2019, but was down 7% below 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 12% from June 2019 and 11% above budget, but fell 13% compared to prior month. Labor Expense per Adjusted Discharge increased 12% year-over-year and 9% above budget, but fell 16% compared to May 2020. Full-Time Equivalents (FTEs) per Adjusted Occupied Bed (AOB) rose less than 2% year-over-year, but declined 12% month-over-month and was essentially in line with 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 was up significantly year-over-year 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 15% year-over-year and was 8% above budget, but remained flat month-over-month. Purchased Service Expense per Adjusted Discharge rose about 10% both year-over-year and compared to budget, but declined 12% 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 increases both year-over-year and to budget for Total Expense, Labor Expense, and Non-Labor Expense per Adjusted Discharge in June. Hospitals with 100-199 beds saw the biggest year-over-year increase in Total Expense per Adjusted Discharge at 21%. The smallest hospitals of 0-25 and 26-99 beds were up just 5% year-over-year, and were the cohorts closest to budget for this metric.
For Labor Expense per Adjusted Discharge, hospitals with 100-199 beds had the greatest year-over-year increase at 16%, while hospitals with 300-499 beds had the greatest increase to budget at 15%. Smaller hospitals of 26-99 beds again had the lowest increases 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 0-25 and 26-99 beds fell across both measures, down approximately 2-5% year-over-year and 4% compared to budget.
Labor Expense
Non-Labor Expense
Supply Expense
Drug Expense
Purchased Service Expense
FTE per AOB
For Non-Labor Expense per Adjusted Discharge, hospitals with 100-199 beds saw the biggest year-over-year increase at 20%. Once again, hospitals with 0-25 and 26-99 beds rose the least year-over-year and were closest to budget. Supply Expense per Adjusted Discharge was above budget and rose 14-22% 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 but 5% above budget in June.
Drug Expense per Adjusted Discharge rose year-over-year for hospitals of all sizes, and was above budget in most cohorts except hospitals of 26-99 beds. The largest hospitals of 500 beds or more saw the biggest increases, jumping 27% year-over-year and 23% above budget. Hospitals of all sizes also saw year-over-year increases in Purchased Service Expense per Adjusted Discharge, and most cohorts were above budget for this metric. Hospitals with 26-99 beds again were the exception, at 2% below budget. Hospitals with 100-199 beds saw the greatest year-over-year increase at 19% for Purchased Service Expense per Adjusted Discharge, while hospitals with 500 beds or more saw the greatest variance to budget at 21%.
©2020 Kaufman, Hall & Associates, LLC
scroll_up.svg
kha_logo.svg
National Hospital Flash Report
menu_icon.svg
mail.svg
Share article
Sign up now for access to the latest news and reports
SUBMIT