Nearly 9 of 10 healthcare providers expect to freeze hiring or cut staff in the coming year, as cost pressures continue to mount for the U.S. hospital industry, according to a pair of new reports from group purchasing agency Novation.
The Irving, Tex.-based GPO released 2 reports this week showing that the economic picture for hospitals remains murky at best, with the overall cost of healthcare supplies expected to rise 2.9%. Novation represents more than 65,000 members of VHA Inc. and UHC, 2 national healthcare alliances, along with Provista LLC.
The GPO pointed to a number of factors for the increase in supplies, including the rising cost of oil, economic troubles in Europe and some pullback in the Chinese economy.
Those pressures are expected to result in escalating costs for hospitals, particularly in the cost of food, facilities and business products, which are all expected to jump by roughly 5%.
The cost of medical devices and supplies is also expected to jump. Orthopedic equipment costs are expected to increase 4.7%; imaging and lab equipment prices are expected to increase 3.2%, followed by capital equipment at 2.8%, surgical supplies at 2.2% and cardiovascular devices expected to tick up at 0.7%.
The report is based on several data sources, including Novation contract information, Novation portfolio executives, suppliers, raw material resources, the U.S. Producer Price Index and the U.S. Consumer Price Index.
As a result of the increased cost pressures, some 88% of hospital systems will look to cut staff or maintain current levels, according to a survey (PDF) of Novation members. Of those respondents who said they would cut costs, 90% said the cuts would come from support services. The majority of respondents represented hospitals with capital budgets of $20 million or less.
More than ⅔ of hospitals said they would maintain current levels or decrease spending on medical technology, with just 33% of systems indicating that they would be purchasing new technology.
However, more than 58% of hospitals said they would be investing in IT infrastructure improvements to comply with new healthcare IT standards and converting medical records from paper to digital.