One of the nation’s largest health systems is shoring up its expenses by cutting back on contract labor amid growing financial challenges.
HCA Healthcare––which operates 182 hospitals and approximately 2,300 ambulatory sites of care, including surgical centers, freestanding emergency rooms, urgent care centers and physician clinics, across 20 states and the U.S.––reported its earnings for the third quarter of 2022 were disappointing compared to the same three-month period in 2021.
The healthcare giant reported total revenues of $14.971 billion, compared to $15.276 billion in the third quarter last year. Net income was $1.134 billion, compared to $2.269 billion last year. The results included losses of sales of facilities, gains on sales of facilities, as well as impacts from Hurricane Ian.
The earnings report comes as hospitals and health systems are facing a challenging financial environment, with the overall sector reporting billions in losses. High inflation rates, a tight labor market, plus the ongoing impacts from the COVID-19 pandemic have put a huge strain on operating margins.
“Despite a difficult comparison to the prior year due to the COVID-19 Delta variant, we are pleased with our results and the execution of our teams in a challenging operating environment, which included tremendous efforts from our courageous frontline caregivers and support teams who worked tirelessly to provide uninterrupted care during Hurricane Ian.”
One area that HCA has made an effort to reduce costs is contract labor, which has soared in demand and use over the past few years. COVID-19-specific nurses and other certain specialties filled in vacant roles over the last few years, commanding higher wages. In addition, more healthcare organizations have relied on contract labor as the labor market has tightened and vacancies have risen. Earlier this year, one report found hospitals’ costs had risen by one-third, with 1 in 5 healthcare workers quitting their jobs and another 25% intending to become a travel nurse.
HCA was able to bring down its rising workforce costs largely due to cutting back on contract labor.
“We made market-based wage adjustments for our employee workforce and were able to absorb much of this with a 19% reduction in contract labor as compared to the second quarter,” Bill Rutherford, chief financial officer, said during the quarterly earnings call with analysts.
However, executives noted they are still “running with a lot more nurses on contract labor” compared to 2019.
Amy joined TriMed Media as a Senior Writer for HealthExec after covering home care for three years. When not writing about all things healthcare, she fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."