September 2020
Expense
Expense by Region *
Hospitals in all regions saw expenses increase year-over-year 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, the West saw the most significant increases at 21% year-over-year and 14% above budget. The Northeast/Mid-Atlantic was the only region to fall below budget for this metric at 3%, but was up 15% year-over-year.
The West also saw the largest increases for Labor Expense per Adjusted Discharge, up 22% year-over-year and 26% above budget. The Northeast/Mid-Atlantic again was the only region to fall below budget at 4%, but was up 11% year-over-year for Labor Expense per Adjusted Discharge.
Labor Expense
Non-Labor Expense
Supply Expense
Drug Expense
Purchased Service Expense
FTE per AOB
For FTEs per AOB, four of five regions were up year-over-year, with the West again seeing the largest increases at 10% year-over-year and compared to budget. The Great Plains was the only region to see a year-over-year decrease at 2% and fell 34% below budget for FTEs per AOB.
Four of five regions rose year-over-year and above budget for both Non-Labor Expense per Adjusted Discharge and Supply Expense per Adjusted Discharge. The West had the greatest year-over-year increase for Non-Labor Expense per Adjusted Discharge at 19%, while the Great Plains and South had the greatest year-over-year increases for Supply Expense per Adjusted Discharge at 16%. The Northeast/Mid-Atlantic was the only region to fall below budget for both metrics.
All regions saw year-over-year increases for Drug Expense per Adjusted Discharge, but the Northeast/Mid-Atlantic and Midwest were below budget while the other three regions were above budget. The West again had the biggest increases, jumping 35% year-over-year and 24% above budget. The Northeast/Mid-Atlantic had the least year-over-year increase at just 1% and fell 7% below budget.
Hospitals across all regions were up year-over-year and compared to budget for Purchased Service Expense per Adjusted Discharge. The South and Northeast/Mid-Atlantic had the greatest year-over-year increases at 21%. The South also had the greatest budget variance at 12% and the Northeast/Mid-Atlantic had the least budget variance at less than 1%.
National Expense Observations
Hospitals across the country saw some year-over-year increases in overall expenses in August, combined with flat-to-declining expenses month-over-month. Total Expense and Total Non-Labor Expense both rose about 1% year-over-year, while Total Labor Expense was up 2% year-over-year. Since the start of the year, Total Expense and Total Labor Expense are up about 2% over 2019 levels, while Total Non-Labor Expense is up 1%.
Looking at specific Non-Labor Expenses, Purchased Service Expense saw the biggest year-over-year increase at 4%, while Drugs Expense was up about 1% and Supply Expense was essentially flat year-over-year.

Total Expense was essentially flat month-over-month and 1% below budget, while Total Labor Expense was essentially flat to budget but up 1% month-over-month. Total Non-Labor Expense fell 1% month-over-month and 2% below budget. Supply Expense had the largest month-over-month decrease at 3% and was 4% below budget. Drugs Expense had the greatest decrease to budget at 5% and was down 1% month-over-month, while Purchased Service Expense was down 2% month-over-month and to budget.
Once adjusted for the month’s low volumes, however, expenses increased across most measures. Total Expense per Adjusted Discharge and Labor Expense per Adjusted Discharge are up 17% year-to-date, while Full-Time Equivalents (FTEs) per Adjusted Occupied Bed (AOB) have increased 8%.
Non-Labor Expense per Adjusted Discharge is up 15% from January-August compared to the same period in 2019. Supply Expense per Adjusted Discharge is up 11%, Drug Expense per Adjusted Discharge is up 16%, and Purchased Service Expense per Adjusted Discharge is up 19% year-to-date.
In August, Total Expense per Adjusted Discharge jumped 15% year-over-year, 3% month-over-month, and 7% above budget. Labor Expense per Adjusted Discharge increased 14% compared to August 2019, 4% compared to July, and was 6% above budget. FTEs per AOB rose 3% year-over-year and 1% month-over-month, but were 1% below budget.
Non-Labor Expense per Adjusted Discharge rose 14% year-over-year, 1% month-over-month, and 6% above budget for the month. Supply Expense per Adjusted Discharge also rose 14% compared to August 2019 and was 4% above budget, but fell 1% compared to prior month. Drug Expense per Adjusted Discharge was up 13% year-over-year, 1% month-over-month, and 5% above budget. Purchased Service Expense per Adjusted Discharge saw the biggest year-over-year increase at 18%, and was up 3% month-over-month and 7% 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%)
0.1%
1.2%
total_expense.svg
Total Labor Expense
(0.3%)
1.4%
2.3%
total_labor_expense.svg
Total Non-Labor Expense
(1.9%)
(1.3%)
0.8%
total_non_labor_expense.svg
Supply Expense
(3.6%)
(3.2%)
0.2%
supply_expense.svg
Drug Expense
(4.6%)
(1.1%)
0.6%
drugs_expense.svg
Purchased Service Expense
(1.5%)
(1.5%)
3.9%
purchased_service_expense.svg
Total Expense per Adjusted Discharge
6.9%
2.6%
14.9%
total_expense_per_adj_discharge.svg
Labor Expense per Adjusted Discharge
6.4%
4.2%
14.0%
labor_expense_per_adj_discharge.svg
FTEs per AOB
(1.1%)
0.7%
2.8%
ftes_per_aob.svg
Non-Labor Expense per Adj. Discharge
6.4%
0.7%
13.5%
non_labor_expense_per_adj_discharge.svg
Supply Expense per Adjusted Discharge
3.9%
(0.7%)
13.5%
supply_expense_per_adj_discharge.svg
Drug Expense per Adjusted Discharge
5.4%
0.7%
13.3%
drug_expense_per_adj_discharge.svg
Purchased Service Expense per Adjusted Discharge
7.0%
2.7%
17.6%
purchased_service_expense_per_adj_discharge.svg
Expense by Bed Size
Looking at hospitals by size, expenses increased year-over-year and compared to budget in August across all bed-size cohorts for most metrics: Total Expense, Labor Expense, Non-Labor Expense, Supply Expense, and Purchased Service Expense per Adjusted Discharge.
For Total Expense per Adjusted Discharge, hospitals with 200-299 beds had the greatest increases at 20% year-over-year and 10% above budget. The smallest hospitals of 0-25 beds had the least year-over-year increase at 8% and were 4% above budget.
Hospitals with 300-499 beds had the greatest increases for Labor Expense per Adjusted Discharge, jumping 22% year-over-year and 10% above budget. For FTEs per AOB, smaller hospitals with 0-25 and 26-99 beds were below budget and down year-over-year, while hospitals with 100-199, 200-299, and 300-499 beds were above budget and up year-over-year. The largest hospitals with 500 beds or more saw FTEs per AOB increase just 1% year-over-year and fall 2% below budget.
Labor Expense
Non-Labor Expense
Supply Expense
Drug Expense
Purchased Service Expense
FTE per AOB
Hospitals with 100-199 beds saw the greatest year-over-year increase for Non-Labor Expense per Adjusted Discharge at 21% and were 8% above budget expectations. Hospitals with 200-299 beds saw the greatest variance to budget at 10% and were up 16% year-over-year for this metric.
The nation's smallest hospitals of 0-25 beds saw the greatest year-over-year increase in Supply Expense per Adjusted Discharge at 19% and were 8% above budget in August. Five of six bed-size cohorts were up year-over-year and above budget for Drug Expense per Adjusted Discharge. Hospitals with 100-199 beds saw the largest year-over-year increase for this metric at 24% and were 5% above budget. Smaller hospitals with 26-99 beds were an outlier, as the only cohort to fall slightly below budget.
For Purchased Service Expense per Adjusted Discharge, mid-sized hospitals with 200-299 beds saw the largest increases at 22% year-over-year and 13% above budget. The smallest hospitals with 0-25 beds saw the least increases at 8% year-over-year and 4% above budget.
©2020 Kaufman, Hall & Associates, LLC
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