How Hospital Labor Costs and Revenue Margins Changed During the COVID-19 Pandemic: National and Statewide Trends

The COVID-19 pandemic exposed many weaknesses in the U.S. health care system and society as a whole. During 2020 and 2021, hospital median net profit margins rose to the highest levels compared to prior years, fueled by federal and state COVID funding and enhanced federal program rates. While profit margins were higher, the impact of rising labor costs on hospital financing is gaining increased attention as hospitals and insurance companies begin negotiating their annual contracts. During the most acute phase of the pandemic, when hospital beds were occupied with COVID-19 patients, hospital administrators struggled to maintain their labor force, especially their nurses. They often resorted to use of contractual arrangements, which cost much more than employed staff.