Experts say hospitals must plan for providing care after an attack

Cybersecurity and patient safety

Experts offer advice for hospitals on protecting systems and patients

Tips and tough love

Criminals know smaller systems are vulnerable to cyberattacks

Targeting small hospitals

Health plans and providers are making progress in doing more administrative tasks electronically, but the new CAQH Index indicates there’s still plenty of work remaining.

 measuring progress in automating business functions. The report shows more of those tasks, such as eligibility and benefits verification, are being done electronically.

Still, the healthcare industry could save $25 billion annually by making the full transition to automating business transactions, according to CAQH, a nonprofit group pushing for more efficiency in innovation in the industry.

The CAQH report also showed a sharp increase in spending on business tasks. Measuring nine common administrative functions, the healthcare industry spent $60 billion on those functions in 2022, an increase of $18 billion over the previous year.

A confluence of factors led to the increase in spending, April Todd, CAQH’s chief policy and research officer, told 

Much of the increase is driven by more people seeking healthcare services, including 

some who delayed care earlier in the COVID-19 pandemic

, she said. The volume of transactions increased 28% in the medical industry, CAQH reports.

“Part of the increase in spend is just pure volume and pent up demand,” Todd said.

Healthcare organizations also have seen staff shortages, with some key workers leaving.

“We had a lot of people retire,” Todd said. “We had a lot of people just decide they weren't going to go back to work. So that left a lot of openings, particularly in the medical field, where we had providers that were doing some of these transactions, and they're very highly paid administrative staff to be doing these transactions. 

"We also had a lot of new staff that were coming in that didn't know what they were doing," she added. "And so it took them more time and more money to do these jobs.”

Hospitals and health systems have struggled to fill openings and

 organizations are paying more to recruit and retain employees

. “We were in a point in time where the economy was essentially very favorable to employees. So there was a lot of demand for employees and salaries went up.”

The uptick in administrative spending could well be an outlier, due to the demand for services in the pandemic, Todd said. And because of the progress already made in automating more functions, CAQH projects the healthcare industry is saving $187 billion annually.

Hal Wolf of HIMSS talks about hospitals, digital health, and the future of healthcare

The industry has made great strides, particularly over the 10 years CAQH has studied electronic adoption, Todd said.

In 2022, 90% of eligibility and benefit verifications were handled electronically, up from 84% two years ago, according to the CAQH report. 

While she’s glad to see continued progress, Todd said, “We still have a ways to go on eligibility.”

“It's nice to see that keep going up, and it would be great to get towards 100% here,” Todd said. “There are 18 billion of those transactions. It is the largest transaction in the healthcare industry. Eligibility transactions are going every day for numerous things. And so that in and of itself is just a huge spend. And so anything that we can do to make that more automated is going to significantly impact the industry.”

While most eligibility verifications are done electronically, that’s not the case with 

, which is among the most onerous transactions in healthcare.

In the process known as prior authorization, providers must obtain approval from payers for certain treatments, medications or procedures. In 2022, only 28% of prior authorizations were handled fully electronically, which is actually an increase of two percentage points over 2021, CAQH reports.

As recently as 2019, only 13% of prior authorizations were handled electronically. So while providers seethe over the time spent in prior authorization, Todd said she is glad to see more progress in automating those transactions.

“Prior authorization is still a very low adopted transaction,” she said. “It's still below 30%. But we've seen a quadrupling in growth since we've been measuring the index, and particularly in the last couple of years, there has been some nice growth there.”

The prior authorization process is more complicated than other transactions, since it involves clinical and administrative systems, Todd said.

She cited another stumbling block in reforming the system: the lack of any standard for attachments, such as lab results that would show a surgical procedure is warranted. So a health system might submit a request electronically, but the provider might need to fax the lab results. 

“That's why there's so many faxes that are done for prior authorization,” she said.

On the upside, the Centers for Medicare & Medicaid Services recently proposed a standard for attachments, which could lead to a significant increase in automation of prior authorization, Todd said. Health plans and vendors have been reluctant to develop standards for attachments that could run afoul of federal agencies, because they fear they would have to spend millions to comply, Todd said.

“It really does impact investment decisions,” she said. “And so the attachment standard from CMS is a very, very big deal.”

In 2022, 91% of transactions involving the coordination of benefits were handled electronically, up from 87% a year earlier, CAQH reports. And 72% of claim status inquiries were automated in 2022, up from 68% a year earlier. Claim payments dipped slightly, from 76% in 2021 to 75% in 2022.

After lagging behind other medical organizations, dental practices are increasingly managing business functions electronically, which is a welcome development, Todd said. “Automation in that space has been really nice to see as well,” she said.

Given the influx of new employees in healthcare organizations to fill vacancies during the pandemic, leaders should focus on training, Todd suggested.

“We need to really train these new folks that are coming in,” Todd said. “Spend time, help them make sure that they're understanding the transactions, so that we can get the time down on what it takes to do those. There really is a need for that, from what we're hearing. There's a lot of new people in this space right now.”

Organizations should continue to press to improve automation in prior authorization, and other functions with low electronic adoption, Todd said. “That's what we hope people use the index for. It gives them areas to focus on and helps to highlight how much money they can save by doing that,” she said.

Smaller hospitals and health systems should embrace the move toward handling more business functions electronically, perhaps with more urgency than larger organizations, Todd said.

“For smaller systems, having electronic systems might actually be more important,” Todd said.

“They're operating on lower margins, lower revenue, and the more automated that they can make their systems, they're going to get paid more quickly, they're going to get paid more accurately,” she added. “And that that only helps them to be sustainable.”

Articles

Providers and health plans are managing more administrative tasks electronically, but there is still room for more progress, according to the new CAQH Index. Spending on business functions rose $18 billion in 2022. 

Healthcare industry could save $25 billion with automation, CAQH says

Hospital websites across the country went down or experienced problems due to cyberattacks in recent days, with a Russian group boasting that it is responsible.

A pro-Russian hacktivist group called “KillNet” has claimed credit for the disruptions, and federal authorities issued a 

 Monday that the group was targeting health systems. The group has attacked hospitals and other organizations in the U.S. and other countries that have supported Ukraine in its war with Russia.

Hospitals in Michigan, North Carolina, Delaware, and Iowa all reported issues with their websites. Typically, the organizations managed to restore the sites within hours and they said there was no impact on patient care.

KillNet specializes in distributed denial-of-service (DDOS) attacks, which involve sending thousands of connection requests to servers, subsequently slowing down or stopping vulnerable systems, federal officials say. The American Hospital Association also issued 

University of Michigan Health experienced problems with its public websites Monday as a result of a cyberattack on a vendor, the 

“University of Michigan Health has been experiencing intermittent problems with its public websites as a result of a cyberattack on a third-party vendor we use to host some of our sites,” spokeswoman Mary Masson, a spokeswoman, told the 

Monday. Within hours, Masson said the issues were intermittent.

ChristianaCare’s main website went down Tuesday night, but it was restored within hours, the 

 said. The system said hospital and health systems remained fully operational and there was no impact to data security.

“On January 31, 2023, ChristianaCare experienced a distributed denial-of-service (DDoS) attack on its main public website, christianacare.org, consistent with other incidents reported this week impacting health care organizations around the world. A DDoS attack is a malicious attempt to disrupt the normal traffic of a website by overwhelming it with a flood of internet traffic."

“Our information technology team worked quickly to resolve the situation, and normal website service was restored within several hours,” the system said.

Atrium Health’s website experienced outages Monday, but the hospital systems and patient portal weren’t affected, 

“There was a temporary disruption to our website,” Atrium Health said in a 

 on Twitter. “Our information technology teams have successfully resolved the situation. It's important to note the disruption affected only our public-facing website. Our hospital systems and patient portal remained fully functional.”

Duke Health experienced “intermittent issues” with its public website Monday, a spokesperson for the North Carolina-based health system confirmed to 

The University of Iowa Health Care said public websites went down Tuesday, but 

 they were restored. These sites were down temporarily: UI Hospitals & Clinics, UI Stead Family Children’s Hospital, and the Carver College of Medicine.

The Health Sector Cybersecurity Coordination Center (HC3), a division within the U.S. Department of Health & Human Services, said KillNet has been active since January 2022 “and is actively targeting the health and public health sector.”

On Jan. 28, KillNet’s alleged attack lists for hospitals and healthcare organizations in several countries was disclosed, HC3 said.

The HC3 advisory to health systems said, “While KillNet’s DDoS attacks usually do not cause major damage, they can cause service outages lasting several hours or even days.”

The group tends to exaggerate its capabilities and HC3 said, “It is worth taking any claims KillNet makes about its attacks or operations with a grain of salt.”

Still, some hospitals endured unwanted headaches this week.

federal authorities said they have disrupted a ransomware gang that has targeted hospitals

 announced Thursday that the FBI managed to break into the networks of Hive, a ransomware group that has threatened health systems, financial companies, and schools around the world. Authorities managed to prevent victims from having to pay $130 million in ransom demands, the justice department said.

more IT professionals say they’re hurting patients

Hundreds of breaches of private health data were reported last year, affecting millions of Americans.

The 11 largest breaches of health data in 2022

A pro-Russian hacktivist group claimed credit. Federal authorities had issued an alert about the group this week.

Hospital websites go down in several states in cyberattacks

City of Hope acquired the Cancer Treatment Centers of America

, the organizations are going to share the same name.

The Cancer Treatment Centers facilities are going to be renamed with the City of Hope brand beginning this month. The Cancer Treatment Centers hospitals in Georgia, Illinois and Arizona will now be known as City of Hope Atlanta, City of Hope Chicago and City of Hope Phoenix.

City of Hope is launching an advertising campaign to tout the name changes. Beyond the names, City of Hope says it is sending a message that the organization has evolved into a truly national system.

Robert Stone, CEO of City of Hope, said the acquisition is enabling the organization to offer more services to more patients.

"This past year, we have made tremendous progress to connect more patients, families and communities to our leading-edge research, treatment and care," Stone said in a statement.

“By transitioning these locations to the City of Hope brand and bringing together 11,000 team members around one shared mission, we underscore our commitment to delivering a consistent patient experience as 'one City of Hope' across our national clinical network,” he added.

More hospital mergers should be coming in 2023

City of Hope acquired CTCA in a $390 million deal that was first announced in December 2021 and completed in February 2022.

City of Hope now boasts 11,000 employees, including 650 doctors and more than 1,000 researchers. The merged organization treated 134,000 patients in 2022. City of Hope has brought bone marrow transplants and cell therapy treatments to the hospitals it has acquired.

As part of its efforts to offer more treatment services, City of Hope has brought in some new executives in new roles.

The organization recently named Kevin Manemann as City of Hope’s executive vice president and chief integration officer for the clinical enterprise, a newly created role. He will focus on patient access and system integration at the regional and national levels, City of Hope said.

In addition, City of Hope named Jo Ann Escasa-Haigh the chief business officer. She’ll oversee financial strategy and mergers and acquisitions. In September 2022, Philip Okala joined City of Hope as system president, and he is leading the system’s clinical care and research entities.

It’s been a busy time for City of Hope. In July, the system opened a new cancer center in Orange County, California.

With the acquisition last year, City of Hope shifted Cancer Treatment Centers to a non-profit organization.

Investors expect more mergers in healthcare, life sciences in 2023

After acquiring Cancer Treatment Centers last year, the facilities will now all be under the City of Hope umbrella. CEO Robert Stone says the system is looking to serve patients nationwide as 'one City of Hope.'

City of Hope renames Cancer Treatment Centers of America hospitals

After much uncertainty and speculation, healthcare providers now know the end date for the federal government’s COVID-19 public health emergency.

President Joe Biden said the COVID-19 emergency will expire on May 11. The Biden administration had promised to provide at least 60 days' notice before ending the emergency declaration, and ended up giving healthcare operators more time to prepare.

“The main takeaway is we’re glad that there’s more than 60 days notice, which is something we have asked for,” said Claire Ernst, director of government affairs for the Medical Group Management Association. She said she hopes the White House will continue to work with the MGMA and other healthcare advocates.

House Republicans are telling Biden he shouldn’t wait until the spring and have crafted legislation designed to end the emergency right away. However, the White House said Americans and hospitals need time before pulling the plug on the public health emergency.

“An abrupt end to the emergency declarations would create wide-ranging chaos and uncertainty throughout the health care system — for states, for hospitals and doctors’ offices, and, most importantly, for tens of millions of Americans,” the 

The Biden administration and Congress previously agreed to extend waivers for telehealth programs beyond the public health emergency. Stacey Hughes, executive vice president of government relations and public policy for the American Hospital Association, said hospitals are hoping to see permanent reforms relating to 

She also stressed that hospitals will continue to face enormous challenges, even with the end of the emergency declaration. 

Hospitals endured their worst financial year of the COVID-19 pandemic in 2022

, according to Kaufman Hall, a healthcare consulting firm.

“While the country may be entering a new phase of the fight against COVID-19, hospitals and their caregivers continue to navigate a host of weighty challenges including workforce shortages and financial pressures, cost increases for equipment and drugs, disrupted supply chains and sicker patients,” Hughes said in a statement. “These issues will require continued attention and investment from the federal government.

“The decision to sunset the PHE is a testament to the progress we have made, but that progress should not end with the PHE,” Hughes said. “We should preserve many of the best care innovations that served us well during the pandemic, like expanded use of telehealth and the development of hospital at home programs. We will work with the administration to build on the lessons learned from the COVID-19 pandemic, beginning with our strong urging that many of the COVID-19 PHE flexibilities be made permanent.

During the public health emergency, hospitals have received a higher reimbursement from Medicare for treating COVID-19 patients, 

 reports. Medicare has offered a 20% bump in its payment rate for COVID-19 admissions, but that ends with the expiration of the public health emergency.

Hospitals should brace for difficult 2023, but ‘there’s light at the end of the tunnel’

The White House is resisting calls to immediately end the public health emergency to avoid “confusion and chaos.”

“Due to this uncertainty, tens of millions of Americans could be at risk of abruptly losing their health insurance, and states could be at risk of losing billions of dollars in funding,” the White House said in its policy statement. “Additionally, hospitals and nursing homes that have relied on flexibilities enabled by the emergency declarations will be plunged into chaos without adequate time to retrain staff and establish new billing processes, likely leading to disruptions in care and payment delays, and many facilities around the country will experience revenue losses.”

Hospitals and healthcare providers would be facing more uncertainty, but the White House and lawmakers agreed to extend some flexibilities in the 

The package included a provision to extend telehealth waivers for healthcare providers through 2024. And the spending package also included a two-year extension for hospital-at-home programs through 2024.

“Congress had addressed a lot of the critical Medicare telehealth waivers in the omnibus,” Ernst said. “Because Congress acted last month, most of our concerns with telehealth access were addressed.”

Where telehealth can help patients, and providers, avoid in-person care

Telehealth advocates had warned one waiver that is tied to the public health emergency allows for the remote prescription of some medications for substance use disorder. That waiver is slated to end after the emergency designation is phased out.

Kyle Zebley, the American Telemedicine Association’s senior vice president of public policy, said that needs to be addressed.

“The ATA and ATA Action implore our government leaders to provide a sense of certainty to a huge cohort of individuals requiring access to important medications for substance use disorders and other necessary drugs via telehealth after May 11,” Zebley said in a statement.

“Unfortunately, flexibilities allowing for remote prescribing of controlled substances, as part of the Ryan Haight Act, currently expire with the PHE. Without a plan in place, these vulnerable populations will be left out in the cold, and we are quite sure this is not the intent of our government leaders.”

Scores of healthcare advocates have written to the administration

 asking them to provide a remedy for remote prescriptions. “There is now an extreme sense of urgency with the public health emergency ending in only a few months," Zebley said.

States received additional funding for Medicaid coverage in the pandemic, but that too is changing. The federal omnibus package allowed states to begin making new determinations for Medicaid eligibility beginning in April, so some states are expected to stop coverage for some recipients.

Healthcare analysts have said millions could be losing coverage from Medicaid.

Health systems and hospitals could also see additional headaches if millions lose Medicaid coverage, advocates say.

The number of Americans deferring healthcare needs due to financial concerns reached a two-decade high

, according to a recent Gallup poll. It’s certainly plausible more people will postpone seeking treatment until they are seriously ill, and they could end up needing hospital admissions and lengthy stays that could be avoided with earlier treatment.

Patients will be paying more for COVID-19 tests when the emergency ends. Americans have been able to get up to eight free tests per month, but they will have to start paying out-of-pocket for those.

COVID-19 vaccines will be covered for those with private insurance, Medicare, and Medicaid, but Americans can expect to pay for treatments, such as Paxlovid, 

The end of the emergency also means changes to Medicare Advantage coverage. In the emergency, Medicare Advantage charged participants the rates at in-network facilities, even if they received care by a provider outside their network, 

 reports. That will phase out when the public health emergency ends in May.

The Food and Drug Administration said the end of the emergency declaration will not affect the agency’s ability to authorize treatments, devices or vaccines for emergency use.

 Tuesday, the FDA said, “Existing emergency use authorizations (EUAs) for products will remain in effect and the agency may continue to issue new EUAs going forward when criteria for issuance are met.”

Providers have time to prepare, but they hope the White House and lawmakers will work with stakeholders. The president is resisting calls to end the emergency right now. 

The COVID-19 public health emergency ends in May. Here’s what it means for healthcare providers.

Researchers at Johns Hopkins University said they are developing ways to use artificial intelligence to detect warning signs of delirium in hospital patients.

The AI algorithms have proven to be successful in early tests, according to findings published in the journal 

The early results carry intriguing implications in improving treatment and detecting patients who could develop delirium, said Robert Stevens, associate professor of anesthesiology and critical care medicine at the Johns Hopkins University School of Medicine and senior author of the study.

“Being able to differentiate between patients at low and high risk of delirium is incredibly important in the ICU because it enables us to devote more resources toward interventions in the high-risk population,” Stevens said in a Johns Hopkins 

Patients with delirium are at greater risk of death, longer hospital stays, or a long-term reduction in cognitive function, researchers have found.

 treated in intensive care units can develop delirium, and roughly a quarter of all older adults admitted to the hospital have been found to have delirium, according to a 

Johns Hopkins engineering students helped develop the AI models used to predict delirium risk, according to the university’s release.

Researchers developed a “static” AI model that predicted risk from a snapshot of patient data just after admission, the university said. They also developed a “dynamic” model that examined patient information, such as pulse and blood pressure, over a period of days to assess the risk of delirium over the next 12 hours. The models were tested by examining more than 100,000 ICU stays at a Boston hospital, Johns Hopkins said.

Both models proved successful in projecting patients that would get delirium. The dynamic model identified patients at risk for delirium up to 90% of the time, while the static model successfully projected patients that would develop delirium 78.5% of the time.

Stevens says he is testing the algorithms on historical patient data at Johns Hopkins Medicine ICUs, and he plans to design a trial to test the models on patients who are admitted to an ICU. He envisions using AI models to try to predict risks of heart failure and embolisms.

“For a lot of these physiological transitions, we think that there are early warning signs that may not be obvious to a clinician but can be picked up on using the kinds of artificial intelligence-supported pattern analysis that we used here,” Stevens said in the news release.

Researchers are finding promising results in the use of AI. Mayo Clinic researchers have used AI-enabled echocardiograms to 

identify patients at greater risk of stroke

Despite a great deal of hype, the widespread use of AI in medicine is just beginning, but healthcare leaders nonetheless predict that 

artificial intelligence has the potential to transform treatment and patient care

Michael Howell, Google’s chief clinical officer and deputy chief health officer, said during a panel in September, “AI will do things we didn’t think were possible.”

Artificial intelligence, healthcare, and questions of legal liability

Many older hospital patients develop delirium. Johns Hopkins researchers used artificial intelligence models to identify patients that were likely to develop delirium. 

Using AI to detect the risk of delirium in patients

Vince King recounted the story of a boy tossing starfish back into the ocean as the tide was going out.

An older man saw the boy and told the youth that he couldn’t save them all. The boy tossed a starfish into the water and said, “But I saved that one.”

, likened that story to the approach of hospitals and health systems in aiding patients in financial need. While hospitals have helped some individuals who have struggled to pay medical bills, King said many haven’t taken a wider look at the problem.

“That was always sort of our approach to financial aid, financial assistance, what patient, we could do one at a time. We felt really good about doing that, which was good work,” King told 

. “The technology is now available where we can help most of them.”

TailorMed offers software solutions to hospitals and healthcare organizations to help patients find programs to assist them with their medical bills. And the company is touting its strong results in 2022.

Over the past year, TailorMed said it secured $1.75 billion in patient funding, from resources such as drug companies’ co-pay assistance to charitable funds. Since the company’s founding in 2016, TailorMed says it has secured more than $2.9 billion. TailorMed says it is now providing its solutions to more than 500 hospitals, more than 1,000 clinics, and nearly 600 pharmacies. The company’s clients include Providence Health, UnityPoint Health, Yale-New Haven Health, and Advocate Aurora Health.

“I’m incredibly proud that 2022 was such a landmark year for the company,” Srulik Dvorsky, CEO and co-founder of TailorMed, said in a news release.

(See part of our conversation with Vince King at the HLTH Conference. The story continues below.)

In the near future, TailorMed aims to find ways to help more patients get the help they need, King said in an interview at the HLTH Conference in November. “We think about affordability,” he says. “In that context, how many patients can we help is our number one driver.”

“Over the next 18-36 months, we’ll continue to grow out that network,” King said. “So fundamentally, our core belief is no constituent on the value chain can do this alone. Providers need pharma, retail pharmacies need pharma, patients need all of it. Hospital administrators are thinking differently about who they partner with and how they partner.’

“We’re creating that network, that ecosystem, for folks to really lean on each other and support the patient and drive outcomes,” he said.

TailorMed also aims to do more beyond helping patients pay for prescriptions and medical bills, including nutrition assistance, he said.

Health systems need to take a broader view of patient needs and opportunities to help them. By helping patients find assistance earlier, they can avoid racking up hefty medical debt.

Some systems may do a good job in helping cancer patients find assistance, King said, but they should look at the bigger picture.

“There are so many other patients that could take advantage of medication assistance,” King said. “If we just step back and look at every prescription, where it’s written and dispensed, and narrow the funnel to find out, who’s eligible, who’s appropriate, what is the timing of that, and how do we engage with them today.

“You can take a holistic view of the organization,” King said. “And that is really the conversation with health providers. You’re asking them to think about it a little differently.”

Hospitals and healthcare organizations haven’t had a lack of will to help those with financial needs, King said, but he pointed to the growing workloads as an obstacle. He noted pharmacists are now administering vaccinations.

“So in doing that, we reduce the time they have to look at other opportunities, for financial assistance or nutrition assistance or other things,” King said.

It’s time for health systems to look more broadly, and use technology to engage all of their patients and help them see what help is available, he said.

The goal is to “prioritize patients that are in a higher risk situation financially or clinically, and put them at the front of the line to make sure that we're helping them at the right time, under the right circumstances,” King said.

By taking that approach, health systems can also improve their own finances, he adds. From a business perspective, King said TailorMed can hit on a host of key performance indicators.

“The clear ones are revenue increase,” he said. “For the system, we directly increase revenue. We increase cost avoidance. They’re managing some of these things and we can do it cheaper and better. Those are hard, tangible dollars that they’ll receive.”

Beyond the financial benefits, health systems can see better clinical results by helping patients with their financial needs.

“If I remove the cost for medication,” he said, “can I get that patient on therapy more quickly? Can I get them to adhere to their therapy throughout the treatment protocol?

“Do I increase outcomes? Do I reduce readmission rates?”

When patients struggle financially, they aren’t the only ones who are affected, he said.

“When that patient chooses rent over medication, that has a downstream impact to your physician, who now cannot get that patient on treatment,” King said. “That patient doesn’t adhere to treatment. They’re missing cycles of medication, so I’m not driving the value-based outcome I want to drive. The patient’s having a poorer experience, clinically and financially.”

Many Americans have deferred treatment due to cost. 

About four in 10 Americans (38%) deferred care due to cost concerns

 in 2022, the highest since Gallup began polling on that question in 2001.

As many health systems and patients are struggling financially, TailorMed sees a greater role for the company’s services.

“There are more patients to help certainly,” King said. “We can broaden our reach and we can engage with more patients. Providers are going to struggle, and that’s a bad thing. And if we can help connect the dots there to get some assistance, it’ll be good for our business and good for their business as well.

“We very much think about ourselves as sort of that connective tissue,” King said. “There will be more opportunity for people searching for assistance.”

The company says it secured more than $1.7 billion to aid patients in 2022. Vince King of TailorMed talked with Chief Healthcare Executive about the company and its prospects for growth.

After strong year, TailorMed looks to help more patients, hospitals with financial needs

Even with a modest rebound in December, 2022 ended up being the worst year of the pandemic financially for hospitals and health systems, Kaufman Hall reported.

About half of the nation’s hospitals finished with negative operating margins, with expenses surpassing revenues, according to the healthcare consulting firm’s latest National Hospital Flash Report, which was released Monday.

December was the only month of the year that Kaufman Hall’s median year-to-date operating margin index wasn’t in negative territory. The index for hospitals was 0.2% in December, ending 

a streak of 11 consecutive months in the red

Hospitals continue to struggle with higher labor costs. Erik Swanson, Kaufman Hall’s senior vice president of data and analytics, said that’s going to be a challenge for health systems in the year ahead as well.

“As we saw throughout 2022, the labor market was unkind to hospitals and provider groups,” Swanson said in a statement. “Given that labor and non-labor expenses are unlikely to recede in 2023, hospitals can embrace better workforce management strategies and leverage their relationships with post-acute care settings to maximize current patient volume trends.”

Labor expenses rose 9% in 2022, compared to the previous year. Health systems and hospitals paid higher wages to staff, and also spent heavily on contract labor due to staffing shortages.

Total expenses rose 7% from 2021 to 2022, according to the report.

Patients are increasingly choosing care outside of inpatient hospital settings, a trend that was illustrated in the fourth quarter of 2022, Kaufman Hall said. More patients went to ambulatory and outpatient surgery, and fewer patients are going to emergency departments, the firm said.

“The front door of the hospital continues to shift away from the emergency department,” the report stated.

Inpatient revenue was flat in 2022 compared to 2021, but outpatient revenue rose 8%, according to the report. Operating room minutes also were flat in 2022, according to the report.

Some gains in December couldn’t offset a miserable year. More patients are shifting to outpatient surgical centers and ambulatory care.