Rising nurses’ salaries impacting Illinois hospitals

[May 28, 2022] By Elyse Kelly | The Center Square contributor

(The Center Square) – Labor cost pressures are forcing Illinois hospitals to make hard decisions, like cutting services.

A national imbalance between supply and demand for nurses has led to an increase in what hospitals shell out to attract nurses.

A.J. Wilhelmi, Illinois’ Health and Hospital Association’s president and CEO, says 50% of a hospital’s budget is for staff, and over the past year, their hospitals have experienced a 20% increase in staffing costs.

“If 50% of their annual budget has seen an increase of 20% over the past year, which is a significant increase, that is going to present serious financial strain and put hospitals in a position to make difficult decisions,” Wilhelmi told The Center Square.

The biggest factor contributing to upward pressure on nurses’ salaries is the exorbitant rate charged by agencies for traveling nurses.

“The increased reliance on traveling nurses during the pandemic has really dramatically increased costs and created significant financial pressure,” Wilhelmi said.

Another factor is the worker pool being drained by early retirements spurred by pandemic burnout, he said.

The increase in costs is having an effect.

Over 40% of IHA’s hospitals were either operating in the red or on a very thin margin, and that was before the pandemic, according to Wilhelmi. He said it’s become challenging over the last few months.

This combined with inflation has hospitals tapping into reserves, but it’s not sustainable, he said.

“To stay viable, hospitals are reviewing options to reduce costs in other areas, and there are no easy answers,” Wilhelmi said. “Hospitals have to evaluate what services and level of community investment they are able to provide.”

When and where services will be eliminated is unknown, though Wilhelmi says things like behavioral health care could go.

“I know that there have been some conversations around whether a downstate [newborn intensive care unit] can remain open,” he said.

Nationally, hospitals are considering raising prices to offset costs. Among the chains looking at this option are HCA Healthcare Inc. and Universal Health Services Inc., who reportedly are asking to raise prices 7.5% to 15%, a Wall Street Journal article stated.

Wilhelmi says IHA’s hospitals will do everything they can to keep all their services available, but they are at risk. He notes that is why they continue to look for other ways to reduce costs and petition the government for relief.