AHA Releases Report Outlining Significant Financial Pressures for Hospitals and Health Systems

May 7, 2024
Reimbursements from Medicare and Medicaid did not keep pace with higher labor, drug, and supply costs in 2023.

The American Hospital Association (AHA) released a new report on May 2 that suggests “hospitals and health systems continue to experience significant financial pressures that challenge their ability to provide 24/7 care for the patients and communities they serve.” The AHA issued a press release regarding the report.

Higher costs for labor, drugs, and supplies are causing substantial challenges to hospitals and health systems. Plus, “reimbursements from Medicare and Medicaid did not keep pace with these mounting costs [in 2023], and hospitals and health systems increasingly encountered challenges navigating onerous commercial insurer practices such as denying and delaying access to and payment for patient care.”

Other findings from the report include that “economy-wide inflation grew by 12.4% between 2021 and 2023, more than double the 5.2% growth in Medicare reimbursement for hospital inpatient care. This makes it harder for hospitals to maintain access to care and invest in cybersecurity and cutting-edge treatment.”

Hospitals and health systems also “incurred significant underpayments,” including payments for “inpatient behavioral health services,” which were on average 34% below costs across all payers; in the outpatient setting, “payments for costly burn and wound services were on average 43% below costs across all payers.” Plus, increasing drug prices and workforce challenges have caused significant financial stress.

AHA President and CEO Rick Pollack, on behalf of AHA, “urges Congress and the Administration to take action to strengthen hospitals and health systems and bolster access to care for all patients and communities.”