Becker's Hospital Review

20 CFO / FINANCE Inflation to erode nonprofit hospital margins, Fitch reports By Hayley DeSilva D ue to ongoing inflation and higher labor, supply and capital costs, nonprofit hospital margins will see further erosion, Fitch reported July 19. Nonprofit hospital margins already took a hit during the pandemic. "With ongoing margin pressures as a result of the pandemic and materially higher inflation, providers will be compelled to attempt to secure much higher rate increases from their commercial payor," according to the report. "is will not be easy, as commercial payors are also facing similar inflationary pressures and consolidated in recent years, resulting in increased leverage over health systems." e report continues that it does not expect CMS to adjust Medicare or Medicaid rates due to inflation. Additionally, it may take years for providers to return to the margins of 2019, pre-pandemic, with many providers currently reporting much thinner margins. Fitch says some providers may benefit from seeking rate increases. e report cites Burlington-based University of Vermont Health Network and Rutland (Vt.) Regional Medical Center as an example, which each asked their state for a nearly 20 percent rate increase. While Rutland Regional's request was denied, it has yet to be announced whether UVM's request was granted. Mergers and acquisitions are being fueled by this inflation, according to the report. However, healthcare regulators are becoming increasingly stringent with these deals to avoid monopolies. Inflation of supplies, higher debt financing, and regulators denying or examining mergers and acquisitions has led to delays in many hospital expansions or renovations. n Image Credit: Adobe Stock UHS profit dips 50% in Q2 By Ayla Ellison K ing of Prussia, Pa.-based Universal Health Services reported higher revenue but a lower profit in the second quarter of 2022. The hospital chain's revenues increased 3.9 percent year over year to $3.3 billion in the second quarter of this year. Revenues from UHS' acute care services were up 3.3 percent year over year on a same-facility basis, while revenues from behavioral healthcare services increased less than 1 percent, according to financial documents released July 25. UHS said the nationwide shortage of nurses and other clinical staff has been a significant operating issue. "In some areas, the labor scarcity is putting a strain on our resources and staff, which has required us to utilize higher-cost temporary labor and pay premiums above standard compensation for essential workers," UHS said in an earnings release. "This staffing shortage has required us to hire expensive temporary personnel and/or enhance wages and benefits to recruit and retain nurses and other clinical staff and support personnel. At certain facilities, particularly within our behavioral health care segment, we have been unable to fill all vacant positions and, consequently, have been required to limit patient volumes." UHS saw expenses increase from $2.8 billion in the second quarter of 2021 to nearly $3.1 billion in the same period this year. After factoring in nonoperating items, UHS ended the second quarter of this year with net income of $164.06 million. The company reported net income of $325.28 million in the same period of 2021. Looking at the first six months of this year, UHS reported net income of $317.98 million on revenues of $6.62 billion. A year earlier, the company posted net income of $534.12 million on revenues of $6.21 billion. n "is staffing shortage has required us to hire expensive temporary personnel and/or enhance wages and benefits to recruit and retain nurses and other clinical staff and support personnel."

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