How My Neighbor Complicates The Baptist CEO’s Life

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Baptist Health’s loss is my neighbor’s gain.

It’s because my neighbor is a traveling X-ray technician. He makes more money traveling from one hospital to another and working a few weeks in a row under contract than if he worked full time in one.

Many hospital professionals do what he does. Troy Wells, president and CEO of Baptist Health, told me that his 11-hospital system paid $89 million in contract labor costs above its normal operating cost in 2021. That was not a problem as federal COVID-19 dollars helped offset the costs.

This year, it had planned to spend $74 million on premium labor, but it looks like it will exceed that amount by $20 million. It also spends another $35 million on higher salaries, mostly for nursing.

These additional staff costs represent a budget increase of about 10% for a hospital system with total revenues of about $1.8 billion. But this year, he’s not getting all those COVID dollars.

“[In] In 2020 and 2021 we were in the black, and we’re severely in the red in 2022,” Wells said. “…I don’t see how we’ll be positive by the end of the year.”

Similarly, the University of Arkansas for Medical Sciences spent $44 million on contract labor in its recently ended fiscal year. The year before the pandemic began, she donated $600,000.

Dr. Steppi Mette, CEO of UAMS Medical Center and Vice Chancellor of UAMS Health, told me that UAMS is counting on halving its contract labor costs, but it is too early to predict if this will happen.

He said market forces have reduced contract labor costs by 30-40%. The number of contract workers at UAMS has increased from 200 to around 190-220 out of a total workforce of 11,000.

The bidding war for traveling nurses came as the profession was already facing a shortage of nurses. Wells said nursing has become a national job market. Arkansas competes with other states for labor while having the lowest commercial insurance reimbursement rates in the nation. Meanwhile, Mette noted that Arkansas also has the lowest Medicare reimbursements in the country.

You can’t blame those nurses or my neighbor. Supply and demand work the same way in the labor market as they do in the market for consumer goods. They had the good sense to get professional certifications in a high-demand and high-paying field. It’s no secret that there are not enough nurses and other health professionals. We all know, or should have known, that you can go to school for a few years, often paid by future employers, and then earn a very good living in a field with many opportunities. When COVID-19 hit, they realized they could make even more money by selling their services to the highest bidder, even if it meant traveling.

And of course, their work also involves risks. I spoke to a nurse at the clinic today who is recovering from her second episode of COVID-19.

Contract labor isn’t the only challenge facing hospitals. Wells told me Baptist Health was facing double-digit inflationary expenses for medical supplies. Like other industries, it also faces supply chain disruptions.

“On any given day, we have 20 things we can’t find,” Wells said.

But unlike other industries — like, of course, gas stations — hospitals can’t just pass the higher costs on to consumers. Indeed, hospitals receive almost all of their revenue from government-sponsored Medicare and Medicaid programs and private insurers. They can’t just negotiate higher rates with the government, so they have to try to get more money from the insurance companies.

Both Wells and Mette said insurance companies seemed to enjoy their financial challenges. But insurance companies, of course, can pass on their higher rates to their customers.

So if your insurance is more expensive next year, put some of the blame on my neighbor for making the right career choice, getting an education, then responding to job market opportunities and doing what the best for his family – while helping the sick people are well.

Shake.

Steve Brawner is a freelance journalist and syndicated columnist. Email him at [email protected] or follow him on Twitter at @stevebrawner.



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