CHICAGO, Aug. 13, 2024 (GLOBE NEWSWIRE) -- Many health systems across the country largely closed gaps in missing payments by the end of Q2 following February’s large-scale disruption to payment processing services, according to a new report from Strata Decision Technology.
Notably, the nation’s largest health systems — which felt the biggest percentage impacts in the months immediately following the February 21 incident — were also among the fastest to recover. The nation’s smallest health systems, however, continue to experience prolonged effects. The latest data indicates that small health systems are still missing approximately 3% to 5% of expected net revenue for patient encounters from February.
“Health systems nationwide felt the repercussions of missing and delayed payments throughout the first half of 2024, but many larger systems were able to narrow those gaps by the end of the second quarter,” said Steve Wasson, chief data and intelligence officer at Strata Decision Technology. “Even with the help of bridge payments and accelerated payments offered by some payors, smaller health systems continue to feel the impacts as they have fewer resources to absorb these types of disruptions.”
At the close of Q2, the smallest health systems (defined as those with annual operating expenses of less than $500 million) had the largest remaining shortfall of 11.1% in estimated missing payments compared to total payments for Medicare inpatient services provided in February.
Mid-sized health systems with annual operating expenses of $500 million to $1 billion fared best in terms of recovering missing payments from the incident, with a shortfall of just 1.5% in Medicare inpatient payments for February. Those with $1 billion to $2.5 billion in operating expenses had a shortfall of 4.3% for February, while those with more than $2.5 billion in operating expenses had a shortfall of 5.5%. Those results are an improvement compared to the end of the first quarter, when payment shortfalls for February ranged from 18.2% to 20.3% for health systems of varying sizes.
Higher pay for hospital employees signals focus on retention
A separate analysis included in the quarterly report shows hospitals decreased use of contract labor in recent months while simultaneously increasing employees’ hourly pay. Together, the trends suggest that organizations are prioritizing higher pay as one means to recruit and retain employed staff members.
Contract labor as a share of total labor expenses decreased from 6.9% in July 2023 to 4.4% as of June 2024 for hospitals nationwide. At the same time, the average hourly rate hospitals paid to employed workers increased year-over-year (YOY) each month from January through June. Increases ranged from a low of 1.9% YOY in May 2024 to a high of 3.1% YOY in January 2024. That is up from YOY decreases in the metric from July to October 2023.
Declines in contract labor and increases in employed pay rates varied greatly for hospitals in different regions. Decreases in contract labor expenses as a share of overall labor expenses ranged 2.1% for hospitals in the South to 3.0% for those in the Midwest from June 2023 to June 2024. Meanwhile, YOY increases in the average hourly rate paid to employed personnel rose from 1.5% for hospitals in the Northeast/Mid-Atlantic to 5.3% for those in the Great Plains.
Looking specifically at registered nurses (RNs), the data show that hospitals are both using fewer RNs on a contract basis while also paying them less compared to one year ago. The number of hours worked by contract nurses as a percent of employed RN hours decreased from 11.2% in July 2023 to 7.8% in June 2024. Hourly rates paid to contract nurses declined over the same period from an average of $96.78 in July 2023 to $90.81 in June 2024.
Read the Q2 2024 Strata Performance Trends report to learn more.
About the Data
The report uses data from Strata’s StrataSphere® and Comparative Analytics database. Comparative Analytics offers access to near real-time data drawn from more than 135,000 physicians from over 10,000 practices and 139 specialty categories, and from 500+ unique departments across more than 1,600 hospitals. Comparative Analytics also provides data and comparisons specific to a single organization for visibility into how their market is evolving. StrataSphere is a unique and comprehensive data-sharing platform that helps providers leverage the power of a network that represents approximately 25% of all provider spend in U.S. healthcare. This report incorporates data from more than 600 hospitals with StrataJazz® Decision Support.
About Strata Decision Technology
Strata Decision Technology provides a cloud-based platform for software and service solutions to help organizations better analyze, plan, and perform in support of their missions. With the combination of Syntellis Performance Solutions’ Axiom solutions, more than 2,300 organizations rely on Strata to provide their financial analytics, planning, and performance solutions. Strata has been named the market leader for Business Decision Support for 18 consecutive years. By uniting these two industry leaders, Strata continues to deliver market-leading solutions and world-class service, with an increased focus on accelerating innovation. For more information, please go to www.stratadecision.com.
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