What is ITs role in a financially challenging time?
Today in health it 2022 is proving to be a difficult financial year for healthcare. My name is Phil Russell. I'm a former CIO for a 16 hospital system and creator of this week health, a set of channels dedicated to keeping health it staff current. And engaged. We want to thank our show sponsors or investing in developing the next generation of health leaders.
Gordian dynamics, Quill health tau site nuance. Canon medical and current health. Check them out at this week. health.com/today. All right. Pull this story from September 15th, backers 2022, the most financially difficult year for hospitals health systems since started the pandemic. , they could probably shorten up that title a little bit, but, , it gives you the gist of what's in this.
Article, let me, , Read a little bit of a new analysis from management consulting from Kaufman hall and associates. Indicates hospitals and health systems continue to face intense. Pressure on staff and resources while also dealing with rising expenses for supplies, drugs, and equipment. And the workforce, according to a September 15th, special Bolton from the American hospital association, these trends are expected to continue through 2022 with hospitals and health systems losing.
Billions of dollars left. Unaddressed these challenges can jeopardize access. To essential healthcare services for patients. According to the Bolton.
Challenges in the first half of 2022 tested healthcare organizations. With the impact of COVID-19 surges, increased expenses and a lack of relief funding for economically struggling institutions. As a result, the most optimistic projections for 2022 indicate that margins will be down 37% compared to pre pandemic levels. More than half of hospitals are operating in the red. According to Kaufman hall and associates and forecast for the remainder of 2022, indicate that margins could be down by 133%.
Compared to pre pandemic levels. More than half of the hospitals, 53%. Are projected to have negative margins for the rest of the year. Furthermore over two thirds of the hospitals are forecast. To operate in the red with expenses projected to increase throughout 2022. Leading to an increase of 135 billion over 2021.
Labor expenses are projected to increase by 86 billion while non-labor expenses are projected to increase by 49 billion. The American hospital association, president and CEO rich. Rick Pollack. Said that, although federal support. And relief have tapered off the fight against COVID-19 has These realities translate into access to services being put in jeopardy. This deserves the immediate attention of policy makers at every level of government to ensure we are able to keep people healthy and maintain a central public services that our communities depend on American simply can't be strong without its hospitals being strong said, Mr.
Pollack. , All right. So that's the story. Why are we even talking about this? As you know, we talk about the intersection of technology and healthcare. We talk about it because you're talking about it. When I get together with CEO's. When I get together with, , other health system leaders, they're talking about the financial realities, they're talking about the.
, the, , labor increases. They're talking about supply chain. Issues. They're talking about, , increased costs of the contracts that are coming due. The it contracts. Coming So a lot of the conversation has to do with finances. So that's one of the reasons we're talking The other is, yeah. You just have to know the environment that you're operating in.
As I'm reading this story, you know, the American hospital association, president CEO, Rick Pollock, he's a professional lobbyist. He's been doing this for He knows how to position this, but if I were to give them a little coaching, I wouldn't take the tack of the fight against COVID, , is not over because the president just said the fight against COVID the pandemic is over. , which is interesting when I saw the president say that the pandemic is over that, , clicked a few things in my head, the end of the.
, health, public health emergency, which will trigger a whole bunch of things. Right. So the reason we talk about policy is to know what's coming down, what's coming down the pike. What should we be worried about? What should we be addressing? What can technology take care of when the president says the end of the pandemic?
First thing we should think is health emergency ends, health emergency ends. The tele-health. , subsidies have to be taken care of. If not, , those will go away as well. A bunch of other things. , we had, , some leniencies put in there and whatnot. We've got to take a look at all those things and make sure we're ready for the public health emergency to go away at your house or some. And have you taken
, so Rick taking that approach, I'll tell you the approach I would take if I were Rick. Talking about the difficulties that health systems are facing from a financial standpoint. , it's probably the second paragraph and really focusing in on. The, the challenge we have across the board. With, , hospitals closing.
With, , financial realities hitting. Health systems, and that will lead to a significant challenges in those communities. In most cases, those are the biggest employers. In those communities. So this is an election year. I would play that card pretty heavily. , but anyway, we, we want to talk. So I would play this a little different if I was Rick, but, , from an it standpoint, what do we need to know? One is, , if there's any way that we can be a part of the, , labor expenses and bringing down the labor expenses, we should be thinking about those projects.
, number two, the labor strife. We have 15,000 nurses on strike in Minneapolis. , if there is something we can do to alleviate. The, , the burden on clinicians, , the increased burden that started at the beginning of the pandemic and has quite frankly continued. , for the better part of two years.
, those are projects that we should prioritize at Otherwise, we're just going to see a continuing. , rise in the number of, , unionized. , union activities at the health system. So we're going to see a rise in strikes. And this doesn't benefit anybody. So you want to get ahead of those things and quite frankly, until you alleviate, , you know,
I mean, here are the concerns alleviate some of the concerns that labor strife is going to continue in that expense line. It's going to go up and it's it's. We're not going to relinquish that whole line. Right. So it will, it will, it will hopefully get to a new norm and stay there. , non-labor expenses.
We've got to think about supply chain. We've got to get ahead of our projects, state of our projects. , plan accordingly. I get the equipment. , early on in the project, if we can. , those are just some of the things that are, that non-labor expense. There's. Obviously some other things, the contracts.
If you have not. I heard a great presentation from a CIO recently and he was talking about his first. , I would say three or four months in the job and how they found every contract, they put it on a calendar. They knew when they were coming due, they gave themselves at least three months to renegotiate the contracts. If they were going to negotiate the contracts.
They looked at all the services that they had contracted for which ones were they using? Which ones weren't they using? That exercise should be going on right now. Shouldn't just assume that, Hey, every, all these contracts growing up because of, , because of inflation, therefore we should expect
And we should just take that. You should really be looking at these contracts very closely. And if I were a CIO right now, that is one of the things I would definitely be keeping a close eye on. So the economy plays a role. We live in the economy. And, , And, , part of the job that they're looking for, it.
And technology to play is to alleviate some of these problems. And so, , that is really the message for today. And that's all for today. If you know someone that might benefit from our channel, please forward them a note. They can subscribe on our website this week out.com. Or wherever you listen to podcasts, apple, Google, overcast, Spotify, Stitcher, you get the picture. We are everywhere.