High Labor Costs Hitting Hospitals as Physicians Generate Less Revenue

Hospital and health systems’ finances have remained stable in the last 12 months, but high labor costs continue to challenge the bottom line, according to the latest Kaufman Hall National Hospital Flash Report, with data through September, and Physician Flash Report, with data for the third quarter of 2024.

The Physician Flash Report found that labor expenses from physicians and other providers accounted for the vast majority (84%) of medical groups’ total expenses. The median investment, or subsidy, per employed physician was $304,312, while provider and physician compensation per full-time employee each increased by 3% compared to a year earlier, according to the report.