Labor Market Inflation Driving Hospital Costs Up
The single largest factor hurting hospital finances is the changing labor market. With 1 in every 5 hospital positions vacant, hospitals have continued to need contract labor—or temporary, non-staff workers—to ensure access to critical services.
For all of fiscal year 2022, hospitals spent more than $1 billion on contract labor to cover open positions, more than doubling $400 million spent in 2021. Prior to the pandemic, Maryland’s hospitals collectively spent $150 million on contract labor. Entering 2023, annualized costs of contract labor remain high, at $600 million.
Hospitals have been working to reduce the reliance on contract labor, by enhancing benefit packages and raising permanent wages. Nursing wages are up 25% from pre-pandemic levels.