Franklin, Tenn.-based Community Health Systems leaders said strong nurse recruitment and retention helped drive down contractor labor costs in the third quarter of 2023.
Contract labor expenses were $54 million in the quarter, improving sequentially from $72 million and outperformed previous expectation for $60 million to $70 million exiting the year, CFO Kevin Hammons said on the health system's Oct. 26 earnings call.
Mr. Hammons said the hourly rate for contract labor improved 10% sequentially. He said overall wage inflation came in slightly better than expected, up approximately 3% year over year compared to the system's forecast 5% for the full year.
The health system previously contracted with medical staffing company American Physician Partners, which filed for Chapter 11 bankruptcy protection in September after announcing its closure in July. Mr. Hammons said medical specialist fees increased slightly from the second quarter, "which included a gross up of expenses for physicians in-sourced from the former APP contract."
"When factoring in the net revenue associated with in-sourcing those physicians, we estimate we benefited by approximately $4 million sequentially compared to the subsidy payments previously paid to APP," Mr. Hammons said. "As [CEO Tim Hingtgen] noted, the progress with our in-sourcing initiative has been very encouraging and we expect further improvement in the coming quarters as we scale this effort."
CHS posted a $91 million loss in the third quarter of 2023.