“Insurance expansion under healthcare reform is starting to yield patient volume for hospitals, but the costs of staffing up for more patients are eclipsing the additional revenue.
Earnings reports for not-for-profit systems in the first half of the year show that many providers are seeing rising salary and benefit expenses cut into revenue gains, leading to smaller operating surpluses.
“As the pieces of the Affordable Care Act are coming together, it’s changing the demand for care,” said Jeff Jones, managing director at Huron Consulting Group. “It’s shifting the way that providers are thinking about their labor pools.”
A report from Standard & Poor’s similarly found that in 2013, expenses increased 7%, outpacing revenue growth of 5%. The rating agency attributed the rising costs to preparations that systems were making to prepare for healthcare reform, including staffing needs.”