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December 14, 2021

Accounts Payable Fraud and Theft: Automation to the Rescue

When Congress passed the bailout money last year, lawmakers focused on the loss of revenue as more-routine surgeries were curtailed and costs skyrocketed for personal protective equipment and supplies for maxed-out ICUs, said Michael J. Alkire, president and chief executive of Premier, a group purchasing and technology company with over 4,400 hospital and health system clients.

What policymakers did not anticipate, he said, was severe attrition among medical staff and the high costs of finding replacement workers to deal with sequential covid caseload spikes spanning more than 18 months. Many hospitals are taking out lines of credit to get them through the crisis.

“It’s going to leave them huge deficits that they are going to have to work out of for years to come,” Alkire said.

Based on an analysis of payroll data of 650 hospitals in its client base, Premier estimates that U.S. hospitals combined have been spending at an annualized rate of $24 billion a year over the course of the pandemic to cover excess labor costs, mostly for overtime and costly contract nurses, which rose 63 percent when comparing October 2019 with July 2021.

In the first half of this year, the sharpest increases in labor costs hit hospitals in the Upper Midwest and across the South, Premier said. Hospitals have spent an additional $3 billion for personal protective equipment, according to Premier.