Hospitals and health systems are facing significant challenges, including workforce shortages, underpayment by Medicare and Medicaid, soaring costs of providing care, and administrative burdens. These issues are jeopardizing access to care and services for patients and communities. The federal government must take action to stabilize hospitals’ finances, strengthen the healthcare workforce, and ensure that hospitals and health systems can continue to serve their communities by supporting today’s workforce and ensuring a future pipeline of professionals to meet the increasing demands for care.
Hospitals and health systems are critical pillars of communities across the United States. With more than 6 million employees, these institutions provide around-the-clock care, support, and comfort to those who are ill or injured. With new medical developments and ideas appearing every day that assist patients and communities in improving their health and wellness, they also act as sources of optimism.
However, despite the unwavering commitment of these institutions to their mission of providing care, hospitals and health systems face many significant challenges today. From historic workforce shortages to rising costs of providing care and regulatory burdens, these challenges are jeopardizing access to care and services for patients and communities alike.
One of the most pressing challenges facing hospitals and health systems is the significant shortage of caregivers, particularly in light of the stress, trauma, and burnout that healthcare workers have experienced during the COVID-19 pandemic. More than 100,000 nurses left the profession in 2021 alone, and projections indicate a potential shortage of up to 124,000 physicians by 2034. Despite the efforts of hospitals and health systems to recruit, retain, and support caregivers, there simply are not enough clinicians to care for patients today, and there are not enough in the pipeline to address the needs of an aging population with increasingly complex diseases and behavioral health conditions.
Another significant challenge facing hospitals and health systems is the underpayment they receive from government programs such as Medicare and Medicaid. These programs pay hospitals less than the actual costs of caring for patients, with combined underpayments from Medicare and Medicaid totaling a staggering $100 billion in 2020. In addition, hospitals provided $42.67 billion in uncompensated care that year, meaning care for which no payment was received from the patient or insurer. Since 2000, hospitals and health systems have provided nearly $745 billion in uncompensated care.
The rising costs of providing care are another major challenge for hospitals and health systems. Between 2019 and 2022, hospital expenses increased by 17.5%, while Medicare payments to hospitals increased by only 7.7% during the same period. Labor expenses, which account for about half of the hospital’s total expenses, increased by 20.8% during this time. These numbers demonstrate that the current healthcare financing system is unsustainable, and patients may experience longer wait times, canceled appointments, or even the loss of critical programs and services in their local communities.
To address these challenges and ensure that hospitals and health systems can continue to serve their communities, Congress and the Administration must take action. The federal government can support hospitals and health systems by enacting policies that stabilize their finances, strengthen the healthcare workforce, and ensure a future pipeline of professionals to meet the increasing demands for care.
Some specific policy proposals that would support hospitals and health systems include:
- Supporting today’s workforce and ensuring a future pipeline of professionals to meet the nation’s increasing demands for care. This could involve investing in training and education programs, expanding loan forgiveness programs, and increasing funding for residency slots.
- Rejecting any proposals that would further cut Medicare or Medicaid payments to hospitals and health systems. These programs are critical sources of funding for hospitals and health systems, and reducing their payments would reduce access to care and services for patients.
- Adopting policies that adjust payments to hospitals during times of record-high inflation, reimbursing hospitals for care provided to patients when they cannot be discharged due to workforce shortages, and providing additional resources to certain urban and rural hospitals that disproportionately serve underrepresented communities.
