After two years on the front lines in the battle against this pandemic, hospitals and health systems have seen a dramatic rise in costs of labor, drugs, supplies and equipment. Coming on top of economywide inflation, this puts enormous pressure on our ability to provide care.
Labor cost per patient increased 19% from 2019 through 2021. By the end of 2021, average hospital drug expenses were 28% higher than prepandemic levels and 37% higher per patient. In addition, people put off care during the pandemic, coming to the hospital sicker and requiring more resources.
Medicare and Medicaid, which account for more than 60% of care provided by hospitals, reimburse hospitals less than the cost of providing care, and their reimbursement rates are nonnegotiable. Combined underpayments from Medicare and Medicaid to hospitals were $100 billion in 2020, up from $76 billion in 2019.