Hospitals Struggle with Budget and Work Shortages Amidst Escalating Omicron Transmission Rates

Hospitals Struggle with Budget and Work Shortages Amidst Escalating Omicron Transmission Rates


The Department of Health and Human Services is distributing billions of dollars to rural health care providers. Smaller hospitals and clinics are experiencing both financial pressures and worker shortages due to the coronavirus pandemic and the escalation of the new variant – Omicron.

The WHO (World Health Organization) is communicating concern over the Omicron variant. The Omicron variant transmits more easily than the original SARS-CoV-2 virus. CDC expects that anyone with Omicron infection can spread the virus to others, even if they are vaccinated or do not have symptoms.

New data shows that the omicron variant accounts for 73.2% of new coronavirus cases in the U.S., with coronavirus hospitalizations reaching over 100,000 people over a 7-day average according to the CDC COVID-Data Tracker. The hospitals are being pushed to the brink and patient health is at risk.

The Impact to Health Care Providers Shown in Numbers

The American Rescue Plan, a relief bill passed by Congress in March, is dispersing $7.5 billion (about $23 per person in the US) to more than 40,000 health care providers in every state and six U.S. territories. The relief funding is purposed with the hope of replacing lost revenue and to offset fiscal losses among rural physicians during the pandemic.

The “2020 National Health Expenditures (NHE) Report,” published only ahead of print in Health Affairs, found that US healthcare spending increased by 9.7 percent last year to $4.1 trillion. That breaks down to about $12,530 per person.

Federal spending on healthcare increased by 36.0 percent in 2020 in response to the pandemic, per the report. The spending included financial assistance given to providers through the Provider Relief Fund and the Paycheck Protection Program. Together, the two programs have allocated $175 billions of federal funds to healthcare providers struggling financially during the pandemic.

The federal government also increased public health spending to approximately $115 billion towards the COVID-19 pandemic response I.e., vaccine production, testing, and public awareness campaigns.

A report by Kaufmann Hall projects hospitals nationwide will lose an estimated $54 billion in net income over the course of the year, even considering federal Coronavirus Aid, Relief, and Economic Security (CARES) Act funding from last year.

Operating rooms account for over 60% of admissions and provide a source of up to 65% of the total hospital’s revenue. With elective surgical procedures being delayed due to COVID-19, the budgets of most hospitals are being negatively impacted.

The Kaiser Family Foundation estimates that the cost of treating a patient with COVID-19 could be more than $20,000, and over $88,000 for patients that require ventilator support.

Understanding Hospital Budgeting

Hospitals do not only play a vital role in maintaining the health of a population, but also contribute significantly to the economy. Because of the rapidly changing nature of the healthcare industry, health systems and hospitals face many budget-related challenges, including:

  • Unpredictable economic events, such as the 2020 COVID-19 pandemic, which can render static budgets outdated and inaccurate
  • Changes to reimbursement and payment models, including declines in Medicare and Medicaid reimbursement
  • Development and adoption of new technologies, such as telehealth and home-based medicine
  • Labor shortages and increasing costs
  • Mergers, acquisitions, and increasing market competition from new care delivery models
  • Supply chain issues and interruptions, such as personal protective equipment (PPE) or prescription drug shortages

The largest source of expenditures for hospitals are staff salaries which account for almost 60% of the total budget which has climbed significantly. The increased wages for nurses to keep hospitals adequately staff is crippling most hospital budgets as they scramble to find replacement nurses due to an increase in staff COVID-19 cases. Some reports indicate wages of over $240 per hour for traveling nurses.

During a pre-pandemic baseline period (2Q-3Q 2019), hospitals reportedly spent a little over $7 per patient, per day on PPE, a figure that climbed to $20.40 during the spring of 2020. The massive spike was driven by increased consumption, as well as off-contract buying and PPE bidding wars that occurred.

Other budget concerns are because of the halting of surgical procedures are reportedly costing the hospitals almost $51 billion a month in lost revenue from March through June 2020. However, this measure is in place to keep patient population safe, therefore elected surgical procedures are limited to a need-only basis.

Hospital Officials Weigh in on Pandemic-Related Challenges

Maintaining the healthcare workforce is fundamental to providing access to quality healthcare in rural areas. Rural healthcare facilities must employ enough healthcare professionals to meet the needs of the community.

The Omicron variant of COVID-19 is creating additional challenges for the nation's hospitals. Hospitals that are already overwhelmed with coronavirus cases have limited capacity to treat additional patients, and some have paused higher-reimbursement elective procedures as a result. The risk of severe illness among patients with other health issues also increases as care is delayed due to the pandemic.

The lost volume from elective procedures is delaying revenue growth. Operating margins will also be pressured in the near term, as the surge in new infections is postponing the restoration of normal volumes. The additional COVID-19 hospital admissions are exacerbating this negative effect on margins.

One study found nearly 1 in 4 COVID-19 deaths was "potentially attributable to hospitals strained by surging caseload." Another showed that COVID-19 surges were associated with higher mortality among other kinds of patients, too.

"Staffing gets stretched to a point where you just can't really effectively provide critical care" says Dr. John Hick, an expert on hospital response to medical disasters. "Stuff gets missed. Patients die because of small errors."

Lower-rated hospitals vs. Highly rated hospitals

Lower-rated hospitals that have full intensive care units are less able than higher-rated hospitals to absorb a decline in reimbursement. Lower-rated, typically smaller hospitals that have full intensive care units are less able than higher-rated hospitals to absorb a decline in reimbursement, lower elective volumes and an increase in expenses caused by the cost of maintaining sufficient healthcare staff, the report revealed.

Highly rated hospitals have enough financial cushion to manage a decline in revenue and an increase in operating costs, given that liquidity remains high. But this liquidity cushion could decline if there are continued pandemic-related shocks to the healthcare system.

Staff Shortages

A nationwide labor shortage has hit the pandemic-strained healthcare industry particularly hard, with burnout causing a significant number of healthcare workers to quit while coronavirus infections continue to sideline a significant share. Hospitals and health agencies are facing the worst staffing shortage in as much as four decades, according to Bloomberg.

About 53% of hospitals in Vermont and 52% in New Mexico reported critical staffing shortages on Saturday, according to data from the U.S. Department of Health & Human Services–a strain that's led some Vermont residents to travel hundreds of miles to nearby states for advanced care.

"At some point, there will be no more elasticity in the hospital system to make space for people," Dr. Andrew Thomas, chief clinical officer at the Ohio State University Wexner Medical Center, which itself faces a staffing shortage, told the Columbus Dispatch on Wednesday, adding that about half of the region’s facilities have postponed elective surgeries due to lack of space.

Four states are dealing with critical staff shortages in at least a third of their hospitals: South Carolina (33%), North Dakota (33%), West Virginia (39%) and Rhode Island (40%)—all more than double the nationwide average of 16.5%.

Strategies to Mitigate Healthcare Staffing Shortages

Stress and infected health workers are contributing greatly to healthcare shortages. “There’s no question” omicron outbreaks among healthcare workers are “significantly diminishing the workforce,” Georges Benjamin, executive director of the American Public Health Association, told the Guardian. “It has profound implications for our ability to not just take care of people with Covid but [also] the other diseases that are out there.”

Vaccine Mandates

Because the current vaccine offerings are shown to both reduce severity and transmission rates, it is encouraged to get both the vaccines and the booster shots. In some factions, vaccines are mandatory. In hospital and clinical spaces, all healthcare workers were required to receive their vaccinations by January 2, 2022.


Masks are shown to be an effective vehicle to prevent the spread of coronavirus and all variants. The COVID-19 vaccines remain effective in preventing serious disease, hospitalization, and death from the SARS-CoV-2 virus. Unvaccinated persons are more likely to get infected and spread the virus which is transmitted through the air and concentrates indoors.


A robust and responsive testing infrastructure is essential to our success in stopping the spread of SARS-CoV-2, the virus that causes COVID-19. Diagnostic testing is intended to identify current infection in individuals and is performed when a person has signs or symptoms consistent with COVID-19, or is asymptomatic, but has recent known or suspected exposure to SARS-CoV-2.

The CDC Shortens Isolation Periods

U.S. Centers for Disease Control recommend that healthcare workers who contract Covid-19 but display mild-to-moderate symptoms and are not moderately or severely immunocompromised can return to work five days after symptoms first appear, down from 10 days previously.

Government Support

President Joe Biden also said the military would deploy about 1,000 doctors, nurses, paramedics and other medical personnel to help alleviate staffing shortages in the coming weeks.

Return to Work Criteria

When staffing shortages are anticipated, healthcare facilities and employers, in collaboration with human resources and occupational health services, should use contingency capacity strategies to plan and prepare for mitigating this problem. These include:

  • Adjusting staff schedules, hiring additional HCP, and rotating HCP to positions that support patient care activities.
  • Cancel all non-essential procedures and visits. Shift HCP who works in these areas to support other patient care activities in the facility.
  • Attempt to address social factors that might prevent HCP from reporting to work, such as need for transportation or housing that allows for physical distancing, particularly if HCP live with individuals with high-risk factors or that are elderly.
  • As appropriate, request that HCP postpone elective time off from work. However, there should be consideration for the mental health benefits of time off and that care-taking responsibilities may differ substantially among various staff members.

Going Forward: Modern Health Care Trends for 2022

The pandemic is helping to reshape the future of medicine in a variety of ways. The challenges are being met with innovative solutions designed to redefine patient engagement while we combat COVID-19. The analysis of big data plays a significant role in the decision-making process for any in the healthcare sector.

As a result, understanding large amounts of raw data sets is a going to play a large role in improving outcomes and service efficiency going forward. Experts recommend embracing big data related technologies that can help improve clinician safety, support patient centric engagement, and streamline workflow operations.

Telemedicine and Telehealth

Telemedicine and telehealth are an increasing technology used to help meet the needs of patients experiencing non-medical emergencies. Certain concessions put in place by government programs are helping providers stay in compliance with HIPPAA guidelines encouraging more physicians to adopt telehealth and virtual assistant technologies.

Artificial Intelligence (AI)

The accumulating data generated in clinics and stored in electronic medical records through common tests and medical imaging allows for more applications of artificial intelligence and high performance data-driven medicine.

These applications have changed and will continue to change the way both doctors and researchers approach clinical problem-solving. Advances in computational power paired with massive amounts of data generated in healthcare systems make many clinical problems ripe for AI applications.

Data Analytics

Honing on the full scope of what data analytics can offer can become a game changer for any size hospital or clinical space. Levering the information regarding patient surges, diagnostic times, hospital expense reports etc., can help identify areas that can handle decreases in budget expenditures.

Managing Medical Supply Chain Disruptions

Many industries are feeling the brunt of pandemic related supply disruptions. Experts in both hospital administration and supply chain logistics agree that Covid-19 exposed many weak links in these processes. Moving forward into 2022, the medical industry hasn’t any choice but to chronicle the lessons and create mitigation plans for continued and future disruptions.

Efforts to mitigate supply chain disruption include detailed assessments of the following:

  • The importance of forming new relationships with hospital suppliers and transportation intermediaries. This will help identify more accurate timelines and other solutions at the port to help get the shipments in and processed.
  • Taking advantage of collaborative data and sharing them among health care providers, manufacturers and distributors is key to understanding each point of intersection among the supply chain. Digital communication helps ward off problems before they start.
  • Inventory-management and supply chain strategies should be routinely scrutinized. Opportunities to better monitor and predict ebbs and flows within the scope of daily operations as well as when product demand surges are critical.
  • Hospitals rely on the supply chain for efficient operations. If the chain experiences a disconnection, patient care and treatment suffer, and hospitals realize lost revenue. Analytical tools track supply chain metrics and increase efficiency. Data suggests an approximate hefty $10 million in yearly cost savings.


The connecting elements between the pandemic and how they impact hospital budgets are not going away anytime soon. Hospital stakeholders understand they need to continue embracing remote and virtual services whenever possible and make strategic decisions with respect to minimizing costs.

As stated above, the most significant revenue sources for hospitals and clinical spaces are being compromised by the increase of PPE equipment, cancelled surgical procedures, and staff support. The implications are two-fold as health care providers are concerned that patients are forgoing important care, such as dialysis services or chronic condition management.

Overcoming the hurdles associated with the new variant – omicron will no doubt place even more emphasis on budget management. Forecasting equipment needs and forming strategic alliances with suppliers may help source hard-to-find equipment (I.e. medical refrigeration) at a low cost.

Partnering with K2 Scientific

K2 Scientific offers a wide variety of medical grade refrigeration and freezers specifically engineered for reliable vaccine storage – but at significantly lower costs. Many of our units are energy star rated and are compliant with FDA regulations. K2 focuses on quality, reliability and customer service. We back all lab refrigerators and freezers with a 2-year full-replacement warranty. We offer an additional 5-year compressor warranty on our High-Performance medical refrigerators and freezers.

The K2 Team is always ready to assist you with any questions regarding selection, availability, and delivery. We value our scientific partnerships and invite you to learn more.

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