This episode features Matt Wolf, Health Care Senior Analyst and National Health Care Business Valuation Leader at RSM US LLP. Here, he shares some thoughts on what is going on with inflation and the labor market in healthcare.
Summary
Healthcare Inflation Rises 5-7%: Insights from Matt Wolf, Health Care Senior Analyst
Matt Wolf, Health Care Senior Analyst and National Health Care Business Valuation Leader at RSM US LLP, recently shared his perspectives on the current inflation and labor market in the healthcare industry. In this episode, Wolf sheds light on the increasing inflation rate and the impact of the shortage of available employees on labor costs.
Higher Healthcare Inflation
According to Wolf, healthcare inflation has gone up to 5-7%, which is a significant increase compared to pre-pandemic times. This rise can be attributed to the labor shortage in both clinical and non-clinical roles. Although hospitals and health systems are attempting to move more of their volumes into lower acuity settings to alleviate some of the burdens, this strategy is leading to margin compression as they still have large and expensive buildings that need to be utilized.
Difficulty in Reducing Contract Staffing Agencies
Healthcare systems have seen positive results from reducing their reliance on contract staffing agencies. However, the high demand for care, coupled with the difficulty of finding employed clinicians to replace contracts, leaves many health systems with no other choice but to renew their staffing contracts. While healthcare systems are attempting to reduce agency staffing, the fact that one million nurses have left the workplace in the last few years makes it a difficult endeavor.
Positive Data and Anecdotal Conversations
Despite the challenges of the current labor market, healthcare systems are taking positive steps towards alleviating the shortage of employees. The data that healthcare systems have seen and the anecdotal conversations they've had are favorable. They understand the urgency of reducing their reliance on contract staffing agencies, and they are taking measures to try and employ more clinicians. As a result, healthcare systems believe they will eventually overcome their labor shortages.
Conclusion
The healthcare industry is facing a challenge in terms of rising inflation and increasing labor costs due to the shortages of employees. However, healthcare systems are attempting to overcome these challenges by reducing their reliance on contract staffing agencies and employing more clinicians. While it is still a challenging endeavor, their positive strides towards alleviating the labor shortage will undoubtedly lead to more favorable outcomes in the future.
Note: This is an AI generated transcript, not edited by a staff writer and is solely intended for educational purposes. If you have any questions/concerns, reach out to podcasts@beckershealthcare.com
This episode aired on 12/13/2022 and can be listened here.
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