Hospital Temporary Labor Costs: A Staggering $1.52 Billion in FY2022

The Massachusetts Health and Hospital Association reports that hospitals spent more than $1.5 billion for temporary staffing in FY 2022.

The COVID-19 pandemic disrupted the healthcare workforce market so dramatically that hospitals in 2022 spent $1.3 billion more for temporary staffing than they did pre-pandemic in 2019, according to a new MHA survey of hospitals representing nearly 90% of staffed inpatient beds in Massachusetts.

To fill gaps in staffing, hospitals hire registered nurses and other staff through “traveler” agencies. Traveler workers, especially R.N.s in high demand, command higher hourly wages – at least two or three times more than what an on-staff clinician would earn. Many often receive signing bonuses. In Fiscal Year 2019, hospitals spent $204 million on
temporary staff. In FY2022, they spent $1.52 billion – a 610% increase. According to the MHA survey, approximately 77% of the $1.52 billion went to hiring temporary R.N.s.

Labor accounts for close to 70% of a hospital’s operating costs. In addition to skyrocketing traveler agency costs, hospitals have increased average hourly wages for in-house staff from 13-to-20%, according to an MHA survey from late 2022. Hospitals are also offering extensive signing bonuses and retention packages to keep employees.

MHA conducted the survey to investigate and highlight the role of temporary labor on the overall financial instability still beleaguering the system.

“The healthcare workforce market in Massachusetts and around the U.S. has been upended and it is unclear where the change is taking us,” said MHA President & CEO Steve Walsh. “The traveler agencies and temporary-worker trend has introduced a highly volatile variable in the budgeting and forecasting models hospitals use to remain financially stable and accessible to patients. Any state effort to analyze and constrain healthcare cost growth must recognize this dramatic workforce shift now occurring. This is a trend that demands our collective policy focus.”

Source: Hospital Temporary Labor Costs: A Staggering $1.52 Billion in FY2022

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