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Hospital Inflation During COVID-19

By: Karis Kelly

 

Inflation across the US has impacted everyone from their grocery to gas prices. According to McKinsey & Company, “from December 2020 to December 2021, the inflation rate in the US was 5.8%” (Singhal and Krishna, 2022). High inflation rates have affected everyone, especially the US healthcare system. With higher costs placed on hospitals, it is only a matter of time until prices set on patients will also increase.


Crucial medical supplies prices for things such as masks and other PPE have skyrocketed. A mix of high demand due to COVID and supply chain disruption has placed high costs on hospitals. as of October 2021, hospitals have spent over $3 billion on PPE” (Muoio, 2021). Before COVID, hospitals spent a fraction of the cost on necessary PPE. In addition, pharmaceutical costs have increased dramatically. Hospital drug expenses were 22% higher on an absolute basis and 65% higher on a per-patient basis in January 2022 compared to January 2020,” according to the American Hospital Association (American Hospital Association, 2022). Bill Santulli, COO of Advocate Aurora Health stated, “During the past year hospital operating expenses have grown faster as compared to the last 5-7 years… the global supply chain disruption has increased the cost of many hospital supplies due to supply shortages particularly from Asian markets along with the increase in shipping and logistic expenses”. Not only have pharmaceutical and material costs increased, but due to COVID, work shortages have hit hospitals hard.


According to the American Hospital Association, “hospital labor expenses per patient in 2021 were 19.1% higher than in 2019” (American Hospital Association, 2022). Bill Santulli, COO of Advocate Aurora Health also stated, “To effectively compete in the labor market we have had to significantly increase wages and use a lot more temporary staff to fill our staffing schedules. The cost of these temporary workers is 3-4 times what we compensate our in-house team”. Throughout the height of COVID, these expenses accumulated for all hospitals, not only in the US but worldwide. The culmination of material, pharmaceutical, and labor expenses put on hospitals have been devastating. Hospitals are still recuperating from the high expenditures due to inflation.

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